Economic Charts

All economic charts are at the bottom of the page.

Saturday, October 23, 2010

Chris Whalen & Barry Ritholz on Banks

Housing Price Double Dip

Gerri Willis on Campaign Contribution Limits

Seems like lifting limits on campaign contributions invites further corruption in government by corporations as it gives corporations more money to buy off politicians.

Weekly KWN Interviews

This week King World News interviews Jim Rickards, Stephen Meister, Greg Weldon, Chris Whalen and Art Cashin.  Each guest takes on different areas of expertise in our markets and what is going on in the banking industry.

Jim Rickards - Talks about what will lead to another massive bank bailout.  Jim breaks down the difference between a mortgage and a note, as well as how they play in foreclosuregate.
Stephen Meister - Is an Attorney in Real Estate litigation and discusses the legality of the foreclosures.
Greg Weldon - Talks about the pull back in the precious metals markets that have occurred over the past few days and the long term outlook/risks.
Chris Whalen - Discusses the foreclosure freeze and how the holder of the note has rights to foreclose and fighting a bank that can prove holding the note, even if the other paper work is off, can still foreclose.  Chris also discusses how a dramatic re-pricing of housing will take place over the next couple of years.
Art Cashin - Discusses the inverse relationship between the dollar and the dow as well as dollar vs. commodities.  Art also talks about the market in the 80's during the banking crisis and the current predicament.

I heard a great analogy I heard earlier was that out of all the countries that would benefit by putting a fiat currency on a gold standard again, the U.S. would be the best positioned and could use it in some of these currency wars.  This kind of move would cause a surge in gold and silver prices.  Interesting note from Art Cashin this week that we will find out what the consumer is going to do (in spending) in two months.

Weekly Unofficial Problem Bank List Update

CalculatedRisk posted the Unofficial Problem Bank List is at 871 institutions with 8 removals (7 due to the failures pointed out in the prior post) and 4 additions.   Assets of all the banks total $402.2 billion dollars.  The other removal was due to the unassisted merger of Citizen National Bank of Springfield into cross-town Empire Bank in Springfield MO.  [ Read More ... ]

Weekly Bank Failures

We lost 7 more banks this week; 2 from Florida, 2 from Georgia, 1 in Illinois, 1 in Kansas & 1 in Arizona. This brings the total bank failed for 2010 count to 139.  We are only 2 banks away from breaking last years 140 banks failed.

POMO Purchase

On Friday October 3rd 2010 the Fed performed another POMO (Permanent Open Market Operation) purchase of $2.49 billion.  This brings the total amount of POMO purchases since August 17th 2010 to $57.811 billion.
Operation 1 - RESULTS
Operation Date:10/22/2010
Type:Outright Coupon Purchase
Time:10:15 AM
Close Time:11:00 AM
Settlement Date:10/25/2010
Maturity/Call Date Range:04/15/2013 - 09/30/2014
Total Par Amt Accepted (mlns) :$2,490
Total Par Amt Submitted (mlns) :$24,808

Thursday, October 21, 2010

Weekly Initial Unemployment Claims

A shocker in the initial claims this week.  Initial unemployment claims is the number of people that filed for unemployment for the first time in the prior week.  This is an important indicator as it foreshadows the rate of unemployment and is an overall indicator of the health of our economy that ripples in the economy by effecting consumer spending, retail sales, savings rate and more.  The forecast called for 454k, but the actual headline number was 452k (this was not the shocker, read on).
The shocker was that last weeks number of 462k was revised to 475k and was the biggest revision we have seen in the past few years.  This is really starting to look like the headline numbers are being announced lower on purpose (manipulated) to make it look better and silently the revisions are made to the real number.  
Take a look at the graph above "Delta in Actual vs. Revised" I think that tells the story.  The spin they put on this currently, is that we improved 23,000 jobs this week (vs. last weeks revision).  That remains to be seen, if the delta next week just hits half this weeks, we are in for a big revision.  As always only pay attention to the revisions, it is the closest to the truth your going to get.  Although this graph only shows this years revision delta, upon creating this data I researched further back and the delta was mostly at zero with small fluctuations, this years actions have been the largest fluctuations in a few years.

Dylan Ratigan Education on the Economy

Wednesday, October 20, 2010

Peter Schiff on the Fed

Weekly Fund Flows

Well the Fund flows report was a little surprising today.  After having each week show a domestic fund outflow in the billions every week, this week it decided to take a small pause (a breather if you will).    Only -$624 Million came out of Domestic stocks and $1.43 billion went into foreign stocks, which gave the total  fund flows (domestic + foreign) a positive flow.

Taxable bonds continued to surge with $5.4 billion in inflows and Municipals slowing down a bit with $243 million in inflows. 

POMO Purchase on TIPS

The Fed bought $660 million dollars in TIPS treasuries. This brings the total purchases since August 17th 2010 to $55.3 Billion.

Operation Date:10/20/2010
Operation Type:Outright TIPS Purchase
Release Time:10:15 AM
Close Time:11:00 AM
Settlement Date:10/21/2010
Maturity/Call Date Range:01/15/2011 - 02/15/2040
Total Par Amt Accepted (mlns) :$660
Total Par Amt Submitted (mlns) :$10,246

Gerri Willis on the U.S. Debt

Of course Gerri Willis and Congressman Nunes are not considering the amount of debt amassed by Fannie, Freddie (in 5.5+ trillion) and the Feds balance sheet which is more.  Taking this into account, the current administration, more than likely, has spent more than others in a smaller timeframe.

Jim Rogers on Trade Wars

Jim points out that even if the stock market gains, the investor could still lose money as the currency it is redeemed in devalues faster than the market appreciates.

Tuesday, October 19, 2010

Gold and Silver Down

Gold and Silver are backing up today due to China raising interest rates, profit taking, strengthening in the dollar,  the stock market sell off due to a dip in IBM's outsourcing business and quarterly reports.
Investors were apparently rattled by a dip in IBM's outsourcing business, and sent its shares falling 3.3 percent, or $4.73, to $138.10 in extended trading.   

Lockheed Martin also warned on the impact of pensions on its bottom line,  as we saw from a previous post that they are $10 billion underfunded on pensions.  Other companies have diminishing views of the future economy (fears of a double dip re-entering) and this is having an impact on business and the market in general.  

Nothing moves in a straight line, a healthy backup was needed and provides opportunity.  See your investment advisor on the right moves for you.

Monthly Housing Data

I don't usually track the housing permits and starts as I think they are not the major problem currently, so I have no charts currently on them.  I will talk about them as they are news that moves the markets.

Building Permits are the annualized number of new residential building permits issued during the previous month and are considered a gauge of future construction activity (construction activity generally permeates throughout an economy into other jobs).  The forecasted number was 58 million new permits, but only 54 million were applied for (thus disappointing analysts).

Housing Starts are the Annualized number of new residential buildings that began construction during the previous month and is considered a gauge of economic health as well as construction ripples jobs throughout an economy. The forecasted number was 0.59 Million and the headline number came in at 0.61 Million, which was better than forecast but inline with the previous month so it did not really impress analysts.

We have bigger messes to clean up before this picture gets better and their is still a boat load of properties on the market and a boat load more about to be on the market when the foreclosure freeze is lifted. I don't see how new construction is needed or how it will do in the next few years. Building to build (i.e. building to inflate our economy) is the wrong answer. We need to expand our manufacturing and agriculture bases again and become more self reliant.

Chris Whalen on Kudlow

Larry talks about the freeze on foreclosures.  Go to 3:30 in the video to catch Chris Whalens comments on BAC's exposure to mortgages.  Barry Ritholtz talks about more bailouts for the housing markets, where Chris counters that if we do this, we will have a problem the likes of something we have not seen before.  Chris is one of the most respected analysts of banks around and has done a lot of research on banks dealings.

The Dollar, Fed and QE2

Pension Funds Flee Stocks

The Wall Street Journal published an article entitled "Pension Funds Flee Stocks In Search of Less-Risky Bets" that says the major commercial Pension Funds are reducing the amount of money they have in stocks as they have become too volatile for them and have not given the returns they need to get to keep the funding gap in check.  They are reducing their holdings anywhere from 10% to 50% which has taken billions of dollars out of the stock market and has moved this money into bonds (the next bubble) and hard assets (commodities).  The funds started moving their money out of stocks after the beating in 2009, which in my book was way to late, you have to wonder why they didn't make more of a move in 2007.  Some of the major funds were also underfunded, but Congress is allowing them to delay contributions to bring them back up to proper levels and is now allowing them to delay further contributions for the foreseeable future. What does this mean for Pensions, well in prior read articles Pension funds targeted a rate of return of 8%+ per year to stay in the black, well current bond prices are not even going to touch that and delaying contributions will only put them more in the red.  It will be interesting to see how the commercial pension funds do over the next few years as some are already underfunded by $10 Billion dollars.

Monday, October 18, 2010

Fed Steps Up POMO Purchases

The FED issued a POMO (Permanent Open Market Operation) purchase today worth $6.26 Billion from its primary dealers.  This brings the total from August 17th 2010 to $54.66 Billion.  Coincidentally the stock market enjoyed another nice rally in the face of fleeing investors, as witnessed by the WSJ article today about how pension funds are taking billions out of the stock market and moving the money into bonds (inflating a larger bubble).  Thus I digress, here's the updated graph:

Operation Date:10/18/2010
Operation Type:Outright Coupon Purchase
Release Time:10:15 AM
Close Time:11:00 AM
Settlement Date:10/19/2010
Maturity/Call Date Range:10/31/2016 - 08/15/2020
Total Par Amt Accepted (mlns) :$6,260
Total Par Amt Submitted (mlns) :$21,836

Sunday, October 17, 2010

William Black Talks Foreclosuregate

Weekly KWN Interviews

This week King World News interviews Jean-Marie Eveillard, Jim Rickards, Felix Zulauf and Art Cashin with the weekly wrap up.

Jean-Marie Eveillard - Discusses QE2 and continued printing of money.  He points out that it is very unlikely that the U.S. will stop printing, but if they did it would be bad for gold.  He says bonds are priced for perfection right now and if anything goes wrong will hurt bonds.
Jim Rickards - Talks about Ted Truman  and how he said the United States should sell its goal and how crazy this idea was.  He says that Central Banks cannot get behind Gold publicly because they would create a run on Gold.  Jim believes that the U.S. will eventually have no choice but to default on the debt causing a massive deflation or collapse of the dollar.
Felix Zulauf - Discusses differences in Gold and Silver as an investment.  He discusses money flows in the market and how money if flowing into the emerging economies and the effect it is having on their currencies.  Felix discusses the outlook for the Euro in the long term as well.
Art Cashin - Discusses the weekly market wrap up.  Art discusses the devaluation of the dollar and inflation's effect on the dollar.

Is The Market Rigged?

Dylan points out that the stock market was put in place for long term capital investment and to provide capital to companies in the U.S. with funds to create new products/innovations. High speed trading is not fulfilling that requirement, it is stealing from 401k's and potential capital investment as investors turn away from stock investing due to this unfair advantage and distortion in the markets.  Over time this steals from the potential for return in the stock market from individual investors whom do not have these capabilities.  It forces us to go back to a time where the only choice we have is to invest in mutual funds and ETF's to take advantage of high frequency trading (and incur the management costs).
As pointed out in the video is that 90% of the high frequency trading orders are canceled which causes the price to be artificially inflated or deflated.  If you are outraged by high frequency trading you can contact the SEC at the following:

You can email the SEC via this link
You can find your regional office from this link

Dylan Ratigan Information on Robo Signers

It would seem that the banks basically hired anybody off the street that didn't even understand how a mortgage worked or much about it.  These people were hired not to ask questions so the mortgages could go through.

Gerri Willis on Robosigners

Have You Looked at Angelo Mozilo's Facebook Recently

ZeroHedge posted an article the other day with Angelo Mozilo's Facebook page.  For those of you who don't know who Angelo Mozilo is, he was the CEO of Countrywide Mortgage who misled investors on the company's situation (risky loan portfolio and deteriorating assets), used shareholder funds to buy back the stock too keep the price elevated.  While doing this, he personally sold off hundreds of millions of dollars in stock.  On friday Oct 15th 2010 he evaded trial by giving a $67.5 million dollar penalty.  Mozilo's actions cost the company billions of dollars (in share price) when it became public that the assets were toxic.  Mozillo's Facebook page is found here.  Pay particular attention to his friends in the screen capture of his Facebook page, very interesting (remember them on election day).