Three important reports were released Tuesday and all of them were bad. The Case-Shiller HPI, however, received the most attention.
I’ll take them in reverse order today, which means the Consumer Confidence data is first. It was far lower than the expected consensus number of economists (66.5) with an actual reading of 60.8. Bloomberg said the following Pessimism is deepening according to the consumer confidence index which at 60.8 in May, for a more than five point loss from April, is at a six-month low, a period of time that includes the spike in oil prices and the Japanese earthquake (prior week revised to 66.0). Weakness is centered where it's not wanted, in the expectations component which is at a seven-month low. Expectations show deterioration for business conditions, for employment and very notably for income where more consumers suddenly see a decrease ahead vs an increase.
The Chicago PMI data was also much worse than the expected consensus number of economists (63.0) with an actual reading of 56.6. Bloomberg said the following A big slowdown for month-to-month growth in new orders helped pull down the Chicago PMI by 11 points in May to 56.6 to indicate the slowest rate of monthly growth since November 2009. New orders fell nearly 13 points to 53.5, still over 50 to indicate an increase compared to April but the weakest reading since September 2009. Growth in backlog orders almost entirely evaporated while inventories surged which suddenly may indicate an unwanted build tied to slowing activity. Delays in deliveries shortened, which is also consistent with general slowing, while production, at 56.0, is still strong but well down from a run of 70 readings. Prices for raw material inputs, at 78.6 and in contrast to most of the readings, did not slow very much.
As mentioned above, the S&P Case Shiller HPI (Home Price Index) received most of today’s attention…other than the latest Greek bailout, of course.
I’ll take them in reverse order today, which means the Consumer Confidence data is first. It was far lower than the expected consensus number of economists (66.5) with an actual reading of 60.8. Bloomberg said the following Pessimism is deepening according to the consumer confidence index which at 60.8 in May, for a more than five point loss from April, is at a six-month low, a period of time that includes the spike in oil prices and the Japanese earthquake (prior week revised to 66.0). Weakness is centered where it's not wanted, in the expectations component which is at a seven-month low. Expectations show deterioration for business conditions, for employment and very notably for income where more consumers suddenly see a decrease ahead vs an increase.
The Chicago PMI data was also much worse than the expected consensus number of economists (63.0) with an actual reading of 56.6. Bloomberg said the following A big slowdown for month-to-month growth in new orders helped pull down the Chicago PMI by 11 points in May to 56.6 to indicate the slowest rate of monthly growth since November 2009. New orders fell nearly 13 points to 53.5, still over 50 to indicate an increase compared to April but the weakest reading since September 2009. Growth in backlog orders almost entirely evaporated while inventories surged which suddenly may indicate an unwanted build tied to slowing activity. Delays in deliveries shortened, which is also consistent with general slowing, while production, at 56.0, is still strong but well down from a run of 70 readings. Prices for raw material inputs, at 78.6 and in contrast to most of the readings, did not slow very much.
As mentioned above, the S&P Case Shiller HPI (Home Price Index) received most of today’s attention…other than the latest Greek bailout, of course.
Now that the government cheese is gone and another home buyer tax credit (read: colossal waste of money) isn’t on the horizon, home prices will find their real level on their own. In the Great Depression, housing was slammed like now and didn’t regain its prior price levels until 19 years had passed. None other than Mr. Shiller himself said that that may happen again today on television.
So if housing is bad and getting worse; how does that affect the bankster cartel? Not well, that’s for sure. Then again, they have very powerful friends in Congress. In fact, at the end of every note I remind everyone of the TRUTH regarding the bankster cartel and the reality of their housing portfolios: it’s a lie.
Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.
So if housing is bad and getting worse; how does that affect the bankster cartel? Not well, that’s for sure. Then again, they have very powerful friends in Congress. In fact, at the end of every note I remind everyone of the TRUTH regarding the bankster cartel and the reality of their housing portfolios: it’s a lie.
Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.
This is a reference to when Congress just changed the rules because reality would be too much for the banks. They had made the rancid supper, but they didn’t have to eat their own cooking. Banksters are able to pretend – legally, thanks to Congress – that housing prices haven’t dropped from 2007 levels, aren’t dropping now, and will not drop in the future.
Said another way, banks do not have to account for falling home prices in a marked-to-market way; rather, they can use mark-to-fantasy valuations because they’re certainly living in fantasy land with current valuations.
They haven't paid the full price for their horrible deeds leading up to the 2008 catastrophe and I doubt they will in the future. An election is coming up fairly soon, so both the left & the right will gladly have hat-in-hand looking for big campaign donations while they let the bankster cartel off the hook again.
Diana Olick’s blog
Said another way, banks do not have to account for falling home prices in a marked-to-market way; rather, they can use mark-to-fantasy valuations because they’re certainly living in fantasy land with current valuations.
They haven't paid the full price for their horrible deeds leading up to the 2008 catastrophe and I doubt they will in the future. An election is coming up fairly soon, so both the left & the right will gladly have hat-in-hand looking for big campaign donations while they let the bankster cartel off the hook again.
Diana Olick’s blog
picks up the notion today with "All will have to take new markdowns if these price pressures continue, which everything points to the fact that it will," says Peter Boockvar at Miller Tabak. "Bank balance sheets are still cluttered with mortgage loans, and they are still being asked to take back bad mortgages from those that bought them, like Fannie Mae and Freddie Mac, so the lower home prices go, the risk rises that another round of balance sheet write downs may be necessary."
"With each subsequent dip in home prices, the portfolio is worth less and the banks will suffer increasing losses," notes RealtyTrac's Rick Sharga.
It's impossible to say what the bank losses are right now, especially when you have to add in more potential put backs, where Fannie and Freddie force the banks to buy back bad loans. All we know is that the more home prices fall, the more the banks stand to suffer, and we all know what happened the last time they suffered.
"With each subsequent dip in home prices, the portfolio is worth less and the banks will suffer increasing losses," notes RealtyTrac's Rick Sharga.
It's impossible to say what the bank losses are right now, especially when you have to add in more potential put backs, where Fannie and Freddie force the banks to buy back bad loans. All we know is that the more home prices fall, the more the banks stand to suffer, and we all know what happened the last time they suffered.
"If we do not see a meaningful recovery in home prices by the end of the year, we may need to contemplate impairment charges on first liens owned by banks and wholesale write-downs of second lien exposures. This implies solvency issues for BAC, WFC, JPM and C, and big losses for the U.S. government and private investors" says Chris Whalen of Institutional Risk Analytics.
You see folks, NOTHING HAS CHANGED ON FRAUD STREET! The whole rally has been a government-led charade. Moreover, like the ongoing Greek saga (default-ON, default-OFF debate) where the can is continually kicked down the road - I believe the same will happen here.
The US bankster cartel will not face insolvency; Congress won’t allow it. The rape of the taxpayer will continue unabated in favor of bankster bailouts, lies, obfuscation, and wonton disregard for reality.
Trade Date: 5/31/11
E-Mini S&P Trades*
(before fees and commissions):
E-Mini S&P Trades*
(before fees and commissions):
- No “Secrets” trades filled.
- Algorithm positions (2)
- “Reading the Tape” positions (4) …combined Secret’s, Algo, & “Reading the Tape” total… +5.25
Sign up as an AvidTrader Member to receive "The Technician" Value Area's each day. The market then has an 80% chance of filling the Value Area. Many traders familiar with the Value Area and the techniques that go along with it use it to help them decide what trades to do each day. Join and see how this technique can help you trade more successfully!
No comments:
Post a Comment