hello from germany,

i have made up a summary of yesterdays ugly housing numbers.

the reality looks even darker....

plus something ot

"bear treath" from colbert :-)

http://immobilienblasen.blogspot.com/

have a nice day

Bill, I use firefox and I've never had any problems with the display (except for an occasional no right margin in the comments section).

Bill,

I regularly use Firefox on both Windows and Macintosh platforms. As reported by Leisa, only the right margin occasionally moves to require a great deal of scrolling to read long lines.

Otherwise, no problems related to Firefox that I can discern.

On a different note, allow me to express my sincere gratitude for your deep commitment to 'social equity' and your reliable postings in furtherance of that worthy attribute! You are of rare quality, indeed!

johojo

an article on subprime risk. .

http://www.atimes.com/atimes/Global_Economy/IC28Dj01.html

Firefox 2.0 here. Occasionally, pages load with floating width tables instead of a fixed width. Next time I'll check in IE to make sure it's a firefox only problem. Could be that one of your post images are too wide and cause problems.

I watch Bollinger Bands patterns. If you pull up a daily index chart with standard bands, today looks like either last July 1 (resistance & reverse) or mid-August (takeoff, though the pattern correlation is not as close). Up until last Wednesday, I thought we were in for a repeat of last June 2 (resistance at the MAs), but they all were taken out. Like MarkM said, the "plays" seem to be accelerating. Big day today for direction.

I have DJI at upper daily bband, at 50 dma, and at upper end of trend channel from 11/05. So if it breaks out here, it's going up a bunch. I suspect sideways the rest of the week, with test of support in April. (Now, am I positioned for it?)

LL&P

t4k

PS: I too use Firefox. Sometimes a post in comments will "break" the right margin, seen it in other blogs as well. Might have been me with all my Star Wars posts yesterday, some goofy character is posted and then it breaks. My bigger issue is typekey doesn't remember me, or "keep me signed in for 2 weeks" after I login. Makes me pause a little more before posting though, so it's OK.

JK484--What a terrific link, thanks for providing it. To understand the issues, one has to understand the structure of these collateralized securities. Wikipedia does a good job of that here http://en.wikipedia.org/wiki/Image:Risk%26ReturnForMBSInvestors.png

Whether or not any of this becomes a problem of greater concern depends on the following:

Are the expected losses within the collateralized portfolio greater or less than the anticipated losses?

My guess is that there is not enough empiricism to answer this question because we've not enough experience in how these specious loans (high interest rates, frequent interest resets, high LTV's, low quality borrowers) perform over time. However, having said that, they could perform perfectly well.

If they don't....those in first loss position could get whacked and hard--that could be lower food chain certificate/security holders, or the orginiator. Also, and I think that this is the big one---if the actual v. expected loan loss performance is greater, then that might trigger a re-rating of these securities. I believe that the re-rating would cause some holders (who have stat./reg. requirement to hold only a certain quality of rated securities in their portfolios.)

And.. where will you find the performance of these babies? IN the form 10-D filings.

What also is becoming clear to me is that lower quality borrowers are shouldering higher interest to become the plankton in the food chain for higher yield. Wouldn't these instruments be the basis for eeking out yield protection for interest rate hedges?

Are these mortgage back securities the junk bonds of our current era? I think that it is a distinct possibility. Same story, different time, different basis (consumer v. corporations).

here more on the cds and the subprime sector

nice chart!

Housing, Subprime Mortgages, And The Swap To Watch

http://macroblog.typepad.com/macroblog/2007/03/housing_subprim.html

i work for a subprime lender. go ahead and short home builders if you havent already
subprime has elimated the 100% loan.
subprime was at least 25% of the national market, 35% where Im at.

And he's UP! That was a devastating blow from Consumer Confidence, but the champ just continues to take these hits and keep on fighting!

QID, SDS, DXD, about to get cheaper...

t4k

Bill,

re: firefox - i noticed that the right margin thingy happens when you click on "comments", but not when you click on the underlined "continue reading" link. happened to me last night.

thanks for the good work, btw.

Bill. You mention the 15 British Soldier issue with Iran. The last time the Iranians took 52 Americans hostage it took 444 days of so called diplomacy to have them released. I doubt the Iranians are in too much hurry to get these soldiers all spruces up to send home anytime soon.

China is now buying Iranian oil in Euros.

http://business.scotsman.com/latest.cfm?id=474362007

Didn't Saddam start selling his oil in......oh..never mind.

Leisa,

I definitely feel like the current mortgage back securities issue is very similar to junk bonds. Michael Milken ( http://en.wikipedia.org/wiki/Michael_Milken ) took banking fees at Drexel Burnham Lambert from $1.2 million to over $4 billion, with all the risk of underwritten junk bonds handed over to investors.

I'm too lazy to dig for figures, but anecdotal evidence suggests that mortgage originators were making out like bandits on origination fees, and again the risk was bundles into MBS that were then fed to the public.

Found an old article on the junk bond collapse ( http://www.findarticles.com/p/articles/mi_m1282/is_n5_v42/ai_8782359 ), of which this was the most telling excerpt:

"As the great bull market of the 1980s wore on, the junk-bond market moved into high-risk territory. Takeovers financed by junk got the stock market moving up again after the ordinary investor called it quits in October 1987--but they also inflated asset prices so radically that more of the new managements found, when they strode into their new executive suites, that they had overpaid for the company and their debt charges were crippling. Milken had dreamed up more and more exotic refinancings for them: payment-in-kind bonds and zero-coupon bonds, all of which delayed the grim moment of cash settlement."

Sound familiar?

From Everbank's Daily Phennig:

So what will the housing slowdown mean for the US$?

"Well we will definitely be seeing a dramatic slowdown in the economy and possibly a reduction in interest rates by year end. Not good news for the US$ which has been seeing some strength from thoughts that the FOMC would actually have to raise rates sometime in 2007 to combat inflation. Lower rates and a slower economy will help to force a sell off in US treasuries by foreign investors, a topic which was addressed by Fed Chairman Bernanke in a March 16 letter.

According to Bernanke, "the US credit markets should be able to absorb without great difficulty any shift in foreign allocations; since foreign holdings represent only a small part of total allocations". What is he smoking? Sure it is a 'small part' as long as you classify over 50% only a 'small part'. International investors, including central banks, own over half of the $4.3 trillion of marketable Treasuries outstanding, according to Treasury figures. Bernanke continues to assure us that the 'substantial accumulation' of reserves by China isn't a problem for the US or its monetary policy.

Maybe he knows something we don't (maybe a back room deal which says they won't sell as long as we don't force them to raise the Renminbi!?!) But looking at the massive amount of treasuries owned by the foreign central banks, I have got to believe this is a problem which will have seriously negative implications for the value of the US$."

Long: Weakening dollar plays & PMs

A fleeting, end of quarter strength from the equity market?

Wouldn't be the first time.

MU on the move.. Finally

Micron memories are in the Apple TV.
http://eetimes.eu/showArticle.jhtml?arti...

g034,

Maybe you should wait for Bernanke's testimony tomorrow to cast the usual hypnotic spell on the bulls and propel the indices back in melt-up state through tax day.

JogyP,

I remain wary of MU's recent move after the latest analyst defense. Seasonality is still a strong headwind, not to mention the pervasive chant that chips everywhere have bottomed (reminiscent of the home builders).

JML

I've noticed a few of the posts don't seem to wrap correctly in Firefox (2.0.0.3) myself, and while I don't know the cause on the website side of things, I found a work-around for users. I have a bookmark up on my bookmarks toolbar named "Wrap" with the following in the "Location" field:
=========
javascript:(function() { var D = document; F(D.body); function F(n) { var u, r, c, x; if (n.nodeType == 3) { u = n.data.search(/\S{45}/); if (u >= 0) { r = n.splitText(u + 45); n.parentNode.insertBefore(D.createElement('wbr'), r); } } else if ((n.tagName != 'STYLE') && (n.tagName != 'SCRIPT')) { for (c = 0; x = n.childNodes[c]; ++c) { F(x); } } } D.body.innerHTML += ' '; })();
=========
[I found that code here: http://forums.mozillazine.org/viewtopic.php?t=185443&highlight=word+wrap ]

Now whenever I see a page that isn't wrapping correctly, I click the "Wrap" button on my bookmarks toolbar and it gets fixed. While I'm hoping Bill gets it fixed on his side, hopefully this will make it a little easier on us in the meantime.

ALOHA !!

I agree with the Everbank comments ... Bernanke is smoking some strange pakalolo! Even if the interest rates are "managed" down by the FED that still makes the US Dollar lose value. Don't forget the downside of that scenario is higher prices for US imports, mainly oil, which translates to higher prices for almost everything. Those mortgage owners in the subprime category who are on the fence barely above water will then be faced with the choice of ... "Do I pay my house payment or do I eat?" That question only comes after they have cut back on retail therapy and the kids blackberrys and sold the SUV for a 1996 Kia! Okay extrapolate that to those prime mortgages that are also on the fence. Perhaps those types will be having to sell off their 401ks and Schwab accounts in order to make ends meet ...

What part of any of these choices makes for a "healthy" economy? I then have to ask ... "Has Ben passed that dubee to George?"

Bill...thanks for continued guidance on the total market ala colonel Twiggs. I've made a big decision to be the master of my portfolio..401k rollover..where all those brokers want to get their hands on. Fellow posters share a lot of concern to the subprime overhang and fondness of the pm's...for good reason...but I am glad to get the rest of the picture. As hard as the miners are getting hit today, which i have my share of... I must be doing something right, knock on wood, my port is 50% exposed to equities and only .1% down. Looks like due to large positions in DBA(aggricultural etf), selected foreign etfs(sweeden,netherlands,asia ex japan) and a few domestic etfs(tele com and clean energy). MU, thanks to the cara 100 philosophy was in position today too. I hope you'll give a headsup to when etf commentary will be appearing in your other blog, though that could be a monumental undertaking and I patiently wait. Great nuggets right here.

Some rough numbers on WGI/WGDF. They are permitted to move 60,000,000 tons of dirt per year. They have an average strip ratio of 2.7:1. So you are left with about 22,222,222 tons of ore. WGI may have used a number of about 76% recovery for the gold and may use about 35% for recovery of the non-0xide. But But! Newmont's metalurgy tests showed recovery of over 80% including the non oxide.See WGDF's corporate presentation.

The average grade is .017 ounces per ton. So 22,222,222 tons of ore (guesstimate)times .017 ounces leaves 377,777 ounces of gold with an 80% recovery (guesstimate)= 282,287 ounces produced per year not 165,000.

If these numbers are correct and we use 650 gold instead of the 500 gold in their base case BFS, WGDF may have a bright future.

Do your own DD these numbers are for fun only.

korvus,

Your "Wrap" bookmark works like a charm. Thanks!

Is it easy enough to explain how to tap into the wrap code?...i don't have a clue as to how "save it to a bookmark."

jasper,

This works in Firefox 2.0 (didn't try FF1.5 or IE):

1) Make sure you can see your bookmark toolbar. You can show it by clicking the top menu View -> Toolbars -> Bookmarks Toolbar

2) Right-click within the bookmarks toolbar and choose the "New Bookmark" option

3) In the Properties dialog window, enter "Wrap" in the Name: field then copy all the code between the ======== in korvus' post into the Location: field

4) Click OK and you should see the new bookmark in the toolbar.

--max

jk484, jmf - those articles show how, at the end of the day,
it's really hard to get high returns without corresponding high risk.
For all the mathematical prowess in the financial world,
insurance rates in the form of CDS's were simply mispriced up to
a few months ago (too good to be true) and by adjusting to the
present reality, are eating into returns and contributing
to deflation of the high-yield bond mkt and secondarily the US
housing mkt in the form of tighter credit.

This line in the article
really struck a chord in me: "The greatest risk may be in thinking
that risk has been conquered. It cannot be. It has not been."
Always seemed to me that the credit mkt was making a dangerous
"new era" assumption that distribution of risk resulted in reduction of risk.
Yes, it works for certain scenarios and you have a certain stability
from many people being hurt a little vs a few getting hit hard. But
does this only make matters worse by opening up the world mkts to other
dangers. Perhaps experts in this community can share what their thoughts
about how the global credit mkts might seize up (Ecuador defaulting?,
MBS's and CDO's finally being re-rated (downwards) en masse?,...)

I struggle with sitting on a large cash position and wishing to be
more long stks of PM's and select commodities, taking a long-term bullish view but
in the face of credit mkt risk, Yen/SFR-carry unwind and all. Let's face it, the
global economic expansion of the past few years and demand for infrastructure
commodities (materials, energy) has been due in large part to the booming credit mkt.
Does anyone remember how the '87 crash unfolded? As swift as
it was when it happened, there supposedly were certain technical clues days/weeks
before that warned investors to stand aside. Circumstances are different now
of course, but part of the story back then was also complacency with risk.
Maybe the best we can do is to keep trading what's in front of us and
hope to be nimbler than the institutions when the mkt turns.

Rico,
In '87, the 200 day simple moving average crossed over on the Dow on Thursday end of day. I got out of all positions on Friday. Market crashed on Monday and Tuesday.

Great move stktrader. Do you mean a moving average
cross-over, like the 50 day crossing under the 200 day?,
or the Dow closing under its 200 day?

In recalling the '87 crash, Peter Grandich
(gold newsletter) mentioned at the vancouver gold show that
while he got media credit for calling the crash, he took a hit when
PM shares were also caught in the downdraft. A very nice guy btw.
So far, PM shares (except select juniors) still track the mkt and
sold off badly last May and Feb. I'm back hunting
for some short candidates to hedge my positions. One idea
is MDY, which Jim Grant mentioned (bloomberg interview) would be
impacted by reduced ratings biz when the CDO party ends.
It's been risky to take short positions with all the buy-out activity
these days. I'd wait for a technical breakdown to prove this
thesis first.