Monday, October 25, 2010
Top Ten countries External % GDP to debt ratio. Same list has names of countries with blood in the streets. Who's next?
Ireland 993.27 %
Great Britain UK 426.65 %
Portugal 256.67 %
France 197.04 %
Greece 182.67 %
Spain 165.51 %
Germany 146.88 %
Australia 114.50 %
Italy 107.59 %
USA 94.96 %
Great Britain UK 426.65 %
Portugal 256.67 %
France 197.04 %
Greece 182.67 %
Spain 165.51 %
Germany 146.88 %
Australia 114.50 %
Italy 107.59 %
USA 94.96 %
An Easy Trade on Rising Commodity Prices
Commodity prices are surging. But rather than recommending a pure commodity play for this week's trade, I'm intrigued by a stock that not only benefits from strong commodity prices, but also more profits for farmers.And with farmers seeing fatter profits from their crops, many are taking the money and putting it into new farm equipment.
According to the Association of Equipment Manufacturers, September sales of row-crop tractors increased by +46.9% from August, while four-wheel drive tractor sales rose +20.5%.
Because of this, shares of Deere (NYSE: DE) -- the world's largest manufacturer of lawn and farm equipment -- are surging. (more)
Bob Chapman: The Internaational Forecaster
October 20 2010: US dollar finding a temporary bottom, gold, silver, and commodities continue to make sense, mortgage scandals, surreal markets, dollar devaluation guaranteed, record deficits, US finally tries to live within its means.
As we write, the US dollar is in the process of trying to find at least a temporary bottom at 76.50 and to launch a countertrend rally. We would think a rally back to 80 is achievable, but we do not believe it’s sustainable - only some stabilization through the election. Japan drew a line in the sand at 82 and finished last Friday trading at 81.37. That does not smack of success, but we see improvement over the next two weeks.
One thing the weaker dollar has done is make exports cheaper for transnational conglomerates and that has helped the market along with these companies repurchasing their stock in the market. In spite of these subsidies the market went nowhere last week. That was probably because of the off again, on again, of quantitative easing 2. Half of the Fed members say lets do it and the other half says do not. In the middle of this verbal conflict is the ever-placid Ben Bernanke, who is answering the call of Wall Street by expanding aggregates via the repo market, which he has been doing since early June. At this point we can assume that the wise guys, who really make the decisions and just happen to own the Fed, have discounted an injection of $500 billion. In addition, they know long-term interest rates are headed lower, although a reduction in the ten year T-note of ½% to 1% is not going to change things much. It will only provide a comfort zone and make big corporations more profits. We do not believe it will have a big influence on home buying with the mortgage scandal in process, which could drag on for years. It will be interesting to see if any bankers are charged criminally. In all probability none will, they just pay fines, or their corporations do, which is all the government is interested in. (more)
Foreclosure Mess Scares Away Investors as 'Fear Has Taken Hold'
Investors who have been snapping up foreclosed homes are backing off in the wake of the U.S. foreclosure fiasco, driven off by sagging inventory and fears over legal title. Some economists say the trend could hurt the overall housing market.
With foreclosed properties accounting for a large portion of housing sales, and investors accounting for a large portion of buyers — particularly in some key markets with very high foreclosure rates — the implications for the broader economy could be serious.
Investors who would buy, rehabilitate and then sell or rent foreclosures were playing a "huge role," in helping to clear the market, said housing economist Tom Lawler.
But many of those investors are now staying on the sidelines.
"We're like a plane flying around in a holding pattern, waiting to land," said Tony Alvarez, an investor in southern California who is currently renting out 40 former foreclosed homes. "Nothing is going on, and why? Fear has taken hold in the marketplace." (more)
With foreclosed properties accounting for a large portion of housing sales, and investors accounting for a large portion of buyers — particularly in some key markets with very high foreclosure rates — the implications for the broader economy could be serious.
Investors who would buy, rehabilitate and then sell or rent foreclosures were playing a "huge role," in helping to clear the market, said housing economist Tom Lawler.
But many of those investors are now staying on the sidelines.
"We're like a plane flying around in a holding pattern, waiting to land," said Tony Alvarez, an investor in southern California who is currently renting out 40 former foreclosed homes. "Nothing is going on, and why? Fear has taken hold in the marketplace." (more)
US Economic Calendar For the week
| Date | Time (ET) | Statistic | For | Actual | Briefing Forecast | Market Expects | Prior | Revised From |
| Oct 25 | 10:00 AM | Existing Home Sales | Sep | - | 4.20M | 4.25M | 4.13M | - |
| Oct 26 | 9:00 AM | Case-Shiller 20-city Index | Aug | - | 2.0% | 2.0% | 3.18% | - |
| Oct 26 | 10:00 AM | Consumer Confidence | Oct | - | 48.0 | 49.0 | 48.5 | - |
| Oct 26 | 10:00 AM | FHFA Home Price Index | Aug | - | NA | NA | -0.5% | - |
| Oct 27 | 7:00 AM | MBA Mortgage Applications | 10/22 | - | NA | NA | -10.5% | - |
| Oct 27 | 8:30 AM | Durable Orders | Sep | - | 1.0% | 1.7% | -1.3% | - |
| Oct 27 | 8:30 AM | Durable Orders - ex transporation | Aug | - | 0.5% | 0.1% | 2.0% | - |
| Oct 27 | 10:00 AM | New Home Sales | Sep | - | 270K | 295K | 288K | - |
| Oct 27 | 10:30 AM | Crude Inventories | 10/23 | - | NA | NA | 0.667M | - |
| Oct 28 | 8:30 AM | Initial Claims | 10/23 | - | 450K | 455K | 452K | - |
| Oct 28 | 8:30 AM | Continuing Claims | 10/16 | - | 4450K | 4418K | 4441K | - |
| Oct 29 | 8:30 AM | GDP-Adv. | Q3 | - | 1.3% | 2.0% | 1.7% | - |
| Oct 29 | 8:30 AM | Chain Deflator-Adv. | Q3 | - | 1.9% | 2.0% | 1.9% | - |
| Oct 29 | 8:30 AM | Employment Cost Index | Q3 | - | 0.5% | 0.5% | 0.5% | - |
| Oct 29 | 9:45 AM | Chicago PMI | Oct | - | 58.0 | 57.5 | 60.40 | - |
| Oct 29 | 9:55 AM | Michigan Sentiment - Final | Oct | - | 67.0 | 68.0 | 67.9 | - |
Saturday, October 23, 2010
Whalen: Foreclosure Crisis Will Collapse Some Big Banks
Institutional Risk Analytics' Chris Whalen says nonpayment by mortgage borrowers and mounting foreclosure backlogs could collapse some of the largest U.S. banks in 2011.
"The improvement in loan-default rates is a mirage,” Whalen said during a recent presentation to the American Enterprise Institute, adding that banks’ subprime-mortgage losses have been hidden by bad accounting.
“The use of loan modification to make bad credits appear ‘current’ is an economic fraud perpetrated by Washington that is already becoming apparent via foreclosure moratoria,” says Whalen.
Moreover, the U.S. banking industry is entering a new period of crisis where operating costs are rising dramatically due to foreclosures and defaults, and we are actually less than one-quarter of the way through mortgage foreclosures.
“The third stage of the banking crisis involves degradation of bank operating efficiency as restructuring accelerates, expenses rise and lenders involuntarily become nonoperating REITs,” says Whalen. (more)
"The improvement in loan-default rates is a mirage,” Whalen said during a recent presentation to the American Enterprise Institute, adding that banks’ subprime-mortgage losses have been hidden by bad accounting.
“The use of loan modification to make bad credits appear ‘current’ is an economic fraud perpetrated by Washington that is already becoming apparent via foreclosure moratoria,” says Whalen.
Moreover, the U.S. banking industry is entering a new period of crisis where operating costs are rising dramatically due to foreclosures and defaults, and we are actually less than one-quarter of the way through mortgage foreclosures.
“The third stage of the banking crisis involves degradation of bank operating efficiency as restructuring accelerates, expenses rise and lenders involuntarily become nonoperating REITs,” says Whalen. (more)
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