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  • Tue, May 12 2009
  • 1:23 PM » Stock markets: reversal time?
    Published Tue, May 12 2009 1:23 PM by Google News
    I indicated in Sunday’s “” review that “the speed and sheer magnitude of the rally argue for markets to either consolidate or retrace some of the past nine weeks’ gains prior to moving higher”. Is the rally is about to be reigned in? While most major stock market indices are encountering resistance at their 200-day moving averages and/or at the early January highs, a few other indicators also warrant our attention. Two sectors that have been leading the overall market higher during the rally that commenced on March 9 - small caps and technology - have reversed their outperformance, as seen from the turnaround in the relative performance. The first chart plots the Nasdaq Composite index relative to the NY Composite Index, while the second compares the performance of the Russell 2000 Small Cap Index with that of the S&P 100 Index (large caps). A rising relative strength line indicates outperformance and a declining line underperformance. Source: Source: I will keep a close eye on these two charts as relative weakness of small caps and technology will not be a good sign for an overall market that is overbought and looking exhausted after its monumental rally over the past nine weeks. Another interesting-looking chart is that of the S&P 500 Index’s . Although a close below the 20-day moving average (dotted blue line) is required to confirm a correction, the fact that the price is touching the upper band indicates a short-term overbought condition. Also, the black line in the bottom section of the chart - measuring the width of the Bollinger bands - has turned up and is signaling expanding bands. This usually points to rising volatility and lower prices, similar to those experienced at the January and February lows. Source: For those who missed the item over the weekend on Adam Hewison’s () technical analysis of the S&P 500’s most likely direction and important chart levels, click to access the video presentation. I still maintain that US and other mature stock...
  • 1:14 PM » HUD Announces It Will Move Forward With RESPA Reform That Will Save Consumers An Average of $700
    Published Tue, May 12 2009 1:14 PM by
    U.S. Housing and Urban Development Secretary Shaun Donovan today announced his intention to implement the mortgage reforms under the Real Estate Settlement Procedures Act (RESPA) that are scheduled to take full effect on January 1, 2010. For the first time in more than 30 years, HUD is updating mortgage rules to help consumers shop for the lowest cost mortgage, avoid costly and potentially harmful loan offers, and save an average of $700.
  • 11:33 AM » Homeowners Turn to Renting, Waiting for Market to Recover
    Published Tue, May 12 2009 11:33 AM by CNBC
    Homeowners are still finding it hard to unload their current residence without suffering a big loss. So they're holding onto the house but renting it out in hopes of selling later when the market improves.
  • 11:12 AM » Fed OMO Update: Fed Purchases $6.007bn in Treasury Coupons Today
    Published Tue, May 12 2009 11:12 AM by NY Fed
    The purchase or sale of Treasury securities on an outright basis adds or drains reserves available in the banking system. Such transactions are arranged on a routine basis to offset other changes in the Federal Reserve’s balance sheet in conjunction with efforts to maintain conditions in the market for reserves consistent with the federal funds target rate set by the Federal Open Market Committee (FOMC).
  • 9:44 AM » MBIA shares rally on strong earnings
    Published Tue, May 12 2009 9:44 AM by Market Watch
    Shares of bond insurer MBIA Inc. rise more than 10% in pre-open trading Tuesday after the company posts better-than-expected earnings.
  • 9:19 AM » Option To Shut Down Fannie, Freddie Discussed By OMB
    Published Tue, May 12 2009 9:19 AM by Google News
    The Office of Management and Budget (OMB) says . Options for overhauling Fannie Mae and Freddie Mac, the government-run mortgage-finance companies, may eventually include liquidating their assets, according to a document released today by the Obama administration. The Office of Management and Budget also projected today that the companies, which have received or requested $78.8 billion in aid since their federal takeover in September, will need at least $92.2 billion more by Sept. 30. The Treasury Department doubled an emergency capital commitment for each company in February to $200 billion. Alternatives under consideration range from “a gradual wind-down of their operations and liquidation of their assets,” to returning the two companies to their previous status as government-sponsored enterprises that seek to maximize shareholder returns while pursuing public-policy goals, according to the document released by the OMB. Shutting Down Fannie and Freddie is the only option worth discussing. The focus should be on how, rather than if. In the meantime, please note that the taxpayer bill is up to $171 billion and counting from $78.8 billion. Does remember the lie that taxpayers would not lose a dime on this? The sooner that Fannie and Freddie are shut down, the better off everyone will be. Mike "Mish" Shedlock Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit to learn more about wealth management and capital preservation strategies of Sitka Pacific.
  • 9:04 AM » BofA raises $7.3bn from CCB stake
    Published Tue, May 12 2009 9:04 AM by
    Bank of America, the stricken US lender, has sold a 6 per cent stake in China Construction Bank to a select group of predominantly mainland Chinese investors and Temasek of Singapore
  • 9:03 AM » Citi using most of TARP capital to make loans: report
    Published Tue, May 12 2009 9:03 AM by Reuters
    (Reuters) - Citigroup Inc, the bank bailed out with $45 billion of U.S. taxpayers' money, is using almost all of that money to make new loans, the Associated Press said citing a report scheduled for release on Tuesday morning.
  • 9:03 AM » Bernanke says early response to bank tests encouraging
    Published Tue, May 12 2009 9:03 AM by Washington Post
    JEKYLL ISLAND, Ga (Reuters) - Government "stress tests" of how 19 major banks would endure a sharp downturn in the economy already appear to be helping banks gain access to private capital, a key element in economic recovery, Federal Reserve Chairman Ben Bernanke said on Monday.
    Click Here to Read the Full Article

    Source: Washington Post
  • 9:03 AM » Federal Reserve Inspector General Unable to Answer Basic Questions on Where the Trillions Went
    Published Tue, May 12 2009 9:03 AM by Google News
    Rep. Alan Grayson asks Inspector General Coleman of the Federal Reserve some very basic questions of about various Fed programs and activities and gets nowhere. And the worse is that the IG isn't stonewalling, but instead is clearly completely clueless. Watching the video, you get the impression that Coleman can't name a program beyond the TALF. But there is a possibly more important issue at stake. The interview is with the Inspector General of the Federal Reserve Board of Governors. The programs are actually at the Federal Reserve Bank of New York. For reasons I cannot fathom, the Board of Governors is subject to Freedom of Information Act requests, while the Fed of New York has been able to rebuff them. So I take Coleman's inability to answer key questions to be a feature, not a bug. The Fed of New York probably can answer Congressional questions, is taking care to limit what it conveys to the Board so as to keep the information from Congress and the public. Note in the questioning the emphasis on "high level reviews".
  • Mon, May 11 2009
  • 3:16 PM » First Quarter Mortgage Fundings Jump, But Still Off From Last Year
    Published Mon, May 11 2009 3:16 PM by
    The top mortgage lenders saw fundings rise substantially during the first quarter of the year, but many couldn’t keep pace with last year’s numbers, according to U.S. mortgage lenders saw production rise 73% from the fourth quarter, but compared to last year, fundings were off nine percent. Wells Fargo was the top home loan lender during [...]
    Click Here to Read the Full Article

  • 8:34 AM » Mortgages Over 5% Mean Fed Purchases as Bonds Slump
    Published Mon, May 11 2009 8:34 AM by Bloomberg
    The world’s biggest investors are increasing bets that Federal Reserve Chairman Ben S. Bernanke will boost purchases of Treasuries as the steepest losses on government debt since 1994 send mortgage rates above 5 percent.
  • 8:32 AM » HSBC cautious despite signs of recovery
    Published Mon, May 11 2009 8:32 AM by
    The bank wrote off $2.4bn on its US subprime mortgage and consumer lending operations, both of which have now been closed to new business, though that was lower than in the fourth quarter of 2008
  • 8:32 AM » Fed's Lacker: Government safety net encouraged financial risk
    Published Mon, May 11 2009 8:32 AM by Reuters
    WASHINGTON/BEIJING (Reuters) - A Federal Reserve policy maker called on Monday for U.S. government protection of the financial industry to be rolled back because it had encouraged excessive risk taking at the heart of the current crisis.
  • 8:32 AM » Banks got concessions on stress tests: WSJ
    Published Mon, May 11 2009 8:32 AM by Market Watch
    The Federal Reserve reportedly scales back the size of capital requirements for major banks undergoing stress tests, with the concessions coming as a result of two weeks of bargaining with sometimes angry corporate executives, according to The Wall Street Journal.
  • Sun, May 10 2009
  • 3:55 PM » Fannie and Freddie Should Also Be Put to the (Stress) Test
    Published Sun, May 10 2009 3:55 PM by Seeking Alpha
    The stress test process disrupted the markets for several weeks. In the end, the government’s effort has delivered some benefits. As a result of the mandated capital increases our banks will be stronger. The idea that all 19 are now ‘sound and safe’ is not correct. However they certainly will be ‘more sound’. Provided that the broad economy does not resume a significant downward slide in the next eighteen months our major banks and financial institutions will make it through this period. The Fed and Treasury put the Financials through the wringer on this one. There is no precedent for this. The group of 19 were given one choice in this matter; either they consent to the process and agree to the conclusions or they go out of business. The circumstances justified the heavy hand of the government. There was a very troubling question in depositors minds, “Is my bank safe?” Even more significant was the question in investors minds, “Should I risk my capital in these entities?” As of Friday both of these questions appear to have been answered in a positive manner.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • Fri, May 8 2009
  • 6:33 PM » Fannie Mae seeks $19 billion in aid after loss
    Published Fri, May 08 2009 6:33 PM by
    Fannie Mae is requesting $19 billion in additional government aid as job losses grow and risky loans made during the housing boom go bad at a disquieting pace.
    Click Here to Read the Full Article

  • 6:33 PM » Washington Calendar: Washington events for May 11 - 15
    Published Fri, May 08 2009 6:33 PM by Market Watch
    9:30 a.m.: Assistant Attorney General for Antitrust Christine Varney discusses antitrust policy under the Obama administration, at the Center for American Progress.
  • 5:00 PM » Real Estate Weekly: Putting the 'cool' into small spaces
    Published Fri, May 08 2009 5:00 PM by Market Watch
    In housing, bigger isn’t always better. For proof, check out the winners of this year’s Small Cool Contest, sponsored by Room & Board and hosted by Apartment Therapy, a home design Web site.
  • 5:00 PM » Slideshow: The 20 Highest Paying Jobs in America
    Published Fri, May 08 2009 5:00 PM by CNBC
  • 3:12 PM » GMAC Will Get 'Substantial Support,' Geithner Says
    Published Fri, May 08 2009 3:12 PM by
    GMAC will get "substantial support" from the Treasury Department following the release of government stress test results that show the firm needs $11.5 billion in additional capital, Treasury Secretary Timothy Geithner told Reuters television.
    Click Here to Read the Full Article

  • 3:12 PM » Credit Markets: Bank of America, Morgan Stanley selling debt
    Published Fri, May 08 2009 3:12 PM by Market Watch
    Both Bank of America and Morgan Stanley offer debt backed by their own credit, meeting a condition to return money borrowed from the government.
  • 12:54 PM » Stress Test: 25-to-1 Leverage as a Healthy Bank Target?
    Published Fri, May 08 2009 12:54 PM by Google News
    The are in. Over the next few days, these pages will be dissected and analyzed for its results, correlation to reality, foibles and methodological errors. As we noted back on April 24th, the ; That pesepctive was a decidely outlier viewpoint back then. Now, it has become more mainstream, as even a WSJ headline this morning declared: . Consider this simple fact: Treasury and the Fed want these banks to have Tier 1 common stock equal to 4% of risk-weighted assets. In other words, 25-to-1 leverage as safe for the future. Hence, it is not a big stretch to conclude that the entire stress test exercise is a near charade, with foregone conclusions of deleveraging banks to still wildly over-extended positions. Recall that before the 2004 SEC Bear Stearns exemption for the 5 biggest investment banks, net cap rules limited leverage to 12-to-1 for investment banks. Is 25-to-1 leverage appropriate for depository banks? Well, maybe before the repeal of Glass Steagal — but with today’s toxic asset laden banks, 25-to-1 seems awfully friendly. Why the generosity? According to , its to allow the banks to “grow” their way out of the mess through earnings. Instead of being an honest broker of the banks conditions, the Treasury Department is now a shareholder and cheerleader for bank profitability: “Treasury Secretary Timothy Geithner is betting that U.S. banks can do something their Japanese counterparts were unable to accomplish in that country’s “lost decade” of the 1990s: earn their way out of trouble. The stress-test results released yesterday by regulators found that the 19 largest banks face a $74.6 billion capital hole that may be filled mostly by private money. That compares with the hundreds of billions of dollars seen by outside analysts, including the International Monetary Fund, and takes into account banks’ projected earnings over the next two years.” What a horrific idea. Put on your rally caps, Uncle Sam is in da house . . . > Originally published at blog and reproduced...
  • 12:53 PM » Finance Workers Start Finding Jobs—But Not on Wall Street
    Published Fri, May 08 2009 12:53 PM by CNBC
    As the government pours billions of dollars into the struggling U.S. banking system, it's apparently coming up with another type of rescue—jobs for financial professionals..
  • 12:53 PM » Board approves final rules revising disclosure requirements for mortgage loans under Regulation Z
    Published Fri, May 08 2009 12:53 PM by Federal Reserve
    Board approves final rules revising disclosure requirements for mortgage loans under Regulation Z
    Click Here to Read the Full Article

    Source: Federal Reserve
  • 12:53 PM » FHA Needs $800 Million for Reverse Mortgage Losses
    Published Fri, May 08 2009 12:53 PM by Google News
    The US Department of Housing and Urban Development (HUD) in its fiscal year 2010 budget proposal requests $798m for the Federal Housing Administration’s (FHA) reverse mortgage program. The Home Equity Conversion Mortgage program offers FHA-insured reverse mortgages to seniors, aged 62 years or older, who want access to the equity in their homes via monthly streams [...]
  • 10:18 AM » JPMorgan on Passing the Stress Tests
    Published Fri, May 08 2009 10:18 AM by
    The results of the government-mandated stress tests drew a dividing line between strong banks and weaker ones. And by common consensus, one of the former is JPMorgan Chase, which according to the tests needs no new capital. Now both externally and internally, the firm is lauding its financial health. In a press release Thursday afternoon, JPMorgan [...]
    Click Here to Read the Full Article

  • 10:18 AM » Treasury to Boost Fannie Backing
    Published Fri, May 08 2009 10:18 AM by WSJ
    Fannie's first-quarter loss ballooned on surging credit losses as the company and Treasury agreed to double the government's support level to $200 billion.
  • 10:02 AM » The Pain of Deleveraging Hits the Consumer
    Published Fri, May 08 2009 10:02 AM by Seeking Alpha
    submits: A very interesting note on consumer credit was by John C. Ogg as banks slowed down lending at a record pace in March. “If you think that credit to consumers (and by consumers) was being cut, you will see that thought was an understatement. Consumer Credit for the month of March was just released and it is the largest percentage drop in almost two decades. The March consumer credit came in down $11.1 billion. Bloomberg had estimates of -$4 billion and Dow Jones had noted a -$3.5 billion drop. It looks like this is actually a record drop measured by dollar terms.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 9:32 AM » Fannie Mae loses $23 billion
    Published Fri, May 08 2009 9:32 AM by CNN
    Fannie Mae, the troubled mortgage finance company, reported a first-quarter loss of $23.2 billion on Friday.
  • 9:32 AM » U.S. jobless rate at 25-year high
    Published Fri, May 08 2009 9:32 AM by Reuters
    WASHINGTON (Reuters) - U.S. employers cut a smaller-than-expected 539,000 jobs in April, the smallest amount since October, according to government data on Friday that hinted at some improvement in the labor market and the recession-hit economy.
  • 9:13 AM » Consumer Credit Plunges Record $11.1 Billion
    Published Fri, May 08 2009 9:13 AM by Google News
    CNNMoney is reporting , more than three times analysts' estimates. U.S. consumer borrowing fell more than expected in March, plunging a record $11.1 billion, a Federal Reserve report showed Thursday. March consumer credit fell at an annual rate of 5.2% to a total of $2.55 trillion. This was the biggest percentage drop since December 1990. Non-revolving credit, which includes closed-end loans for big-ticket items like cars, boats, college education and holidays, dropped $5.7 billion, or at a 4.2% rate, to $1.6 trillion. Revolving credit, made up of credit and charge cards, fell $5.4 billion, or at a 6.8% rate, to $946 billion in March. This compared with a revised $9.7 billion drop in February. Total Consumer Credit Outstanding click on chart for sharper image There is no way those loans can be all paid back, so they won't. Rising unemployment and falling asset prices seals the fate. Total Consumer Credit Outstanding % Growth click on chart for sharper image As a sign of consumer retrenchment, banks willingness to extend loans, and rising defaults, we are about to see the first contraction in consumer credit since the early 1990's. Mike "Mish" Shedlock To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit to learn more about wealth management and capital preservation strategies of Sitka Pacific.
  • 8:42 AM » The Employment Situation Report
    Published Fri, May 08 2009 8:42 AM by
    Non Farm Payrolls Report
  • Thu, May 7 2009
  • 9:10 PM » Federal Reserve, OCC, and FDIC release results of the Supervisory Capital Assessment Program
    Published Thu, May 07 2009 9:10 PM by Federal Reserve
    Federal Reserve, OCC, and FDIC release results of the Supervisory Capital Assessment Program
    Click Here to Read the Full Article

    Source: Federal Reserve
  • 9:10 PM » Bank of America's $34 Billion - Is That All?
    Published Thu, May 07 2009 9:10 PM by Seeking Alpha
    submits: Bank Of America () has been surging the last few days, up 56% the last 5 days, despite leaked information from the Federal Government Stress Test results. Even though the leaked details of BAC's capital needs seem ludicrously high, the number could have been a lot worse. Analysts have been on BAC's high horse, upgrading the stock, despite the need for $34Billion in capital! And here's why: Despite the fact that $34Billion seems high, you've got to remember this is Wall Street thinking. The same Wall Street thinking that applauded a government move to secure defaults on over $300Billion in debt of Citigroup (). Both banks have been surging lately as Investors jump back into an industry that was decimated by the credit crunch losses and prolonged recession. For Bank Of America, and several other banks requiring more capital, the easiest thing to do would be to convert preferred shares into common equity. In BAC's case, doing so would add approximately $28Billion in capital, according to an analyst from Morgan Stanley. The comprehensive analyst report from Morgan's Betsy Graseck details other potential asset sales that would raise the remainder of the required capital. All in all, a situation for BAC that looks much brighter compared to several weeks ago. It was very recently that Goldman Sachs () made a splash by raising $5Billion in a stock offering, in order to use the money to repay the government's TARP funds.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 5:39 PM » US Treasury Department on CAPITAL ASSITANCE PROGRAM and the STRESS TESTS (SCAP)
    Published Thu, May 07 2009 5:39 PM by US Treasury
    This afternoon, the Federal Reserve and the national banking agencies released the results of the stress tests - the most comprehensive, forward looking review of our nation's largest banks ever undertaken. These tests will help ensure that banks have a sufficient capital cushion to continue lending in a more adverse economic scenario. They will provide the transparency necessary for individuals and markets to judge the strength of the banking system.
  • 4:07 PM » Fed Purchases Net $25.4bn ($73.9 billion gross) Agency Mortgage-Backed Securities
    Published Thu, May 07 2009 4:07 PM by NY Fed
    Purchases in agency MBS by investment managers acting as agents for the System Open Market Account (SOMA).
  • 3:30 PM » Economic Report: Consumer credit drops record $11.1 billion
    Published Thu, May 07 2009 3:30 PM by Market Watch
    Consumers’ debts fall a record $11.1 billion in March, sending outstanding debt levels down at a 5.2% annual pace, the fastest decline since 1990, the Federal Reserve reports.
  • 12:24 PM » Almost all biggest subprime lenders have received bailout money
    Published Thu, May 07 2009 12:24 PM by Google News
    The top subprime lenders whose loans are largely blamed for triggering the global economic meltdown were owned or bankrolled by banks now collecting billions of dollars in bailout money — including several that have paid huge fines to settle predatory lending charges. These big institutions were not only unwitting victims of an unforeseen financial collapse, as they have sometimes portrayed themselves, but enablers that bankrolled the type of lending that has threatened the financial system. These are among the findings of a Center for Public Integrity analysis of data on nearly 7.2 million “high-interest” or subprime loans made from 2005 through 2007, a period that marks the peak and collapse of the subprime boom. The computer-assisted analysis also reveals the top 25 originators of high-interest loans, for nearly $1 trillion, or about 72 percent of such loans made during that period. The Center found that U.S. and European investment banks invested enormous sums in subprime lending due to unceasing demand for high-yield, high-risk bonds backed by home mortgages. The banks made huge profits while their executives collected handsome bonuses until the bottom fell out of the real estate market. Investment banks Lehman Brothers, Merrill Lynch, JPMorgan & Co., and Citigroup Inc. both owned and financed subprime lenders. Others, like RBS Greenwich Capital Investments Corp. (part of the Royal Bank of Scotland), Swiss bank Credit Suisse First Boston, and Goldman Sachs & Co., were major financial backers of subprime lenders. According to the Center’s analysis: At least 21 of the top 25 subprime lenders were financed by banks that — through direct ownership, credit agreements, or huge purchases of loans for securitization. Twenty of the top 25 subprime lenders have closed, stopped lending, or been sold to avoid . Most were not banks and were not permitted to collect deposits. Eleven of the lenders on the list have made payments to settle claims of widespread lending abuses...
  • 11:26 AM » Angelo Mozilo May Stand Trial in Florida for Homeowner Abuses
    Published Thu, May 07 2009 11:26 AM by
    Florida Attorney General Bill McCollum said late last week that his office obtained a federal court order remanding his lawsuit against former Countrywide CEO Angelo Mozilo back to Broward County Circuit Court. The suit, filed last June, in which Mozilo was named a defendant, addressed deceptive trade practices related to Countywide allegedly putting borrowers into misleading [...]
    Click Here to Read the Full Article

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