-- Posted Sunday, 23 November 2008 | Digg This Article
| Source: GoldSeek.com
The following are some snippets from the most recent issue of the International Forecaster. For the full 31 page issue, please see subscription information below.
US MARKETS
...
Housing starts fell to a record low of 4.5% in October and applications for building permits fell 12%. It looks like the builders after three years are finally getting the message. Wait until you see how many of these builders go under. The mortgage purchase applications index fell 12.6% versus plus 9% in the previous week. The refi index rose 2.6% versus 16.1%. The 30-year fixed fell 7 bps to 6.16%.
Credit Swiss has warned that two big commercial mortgages that had been packaged into securities in the past year that are likely to default. Delinquencies of US commercial mortgage-backed securities edged up to 0.51% last month from 0.45% in September. Borrowers are facing increased difficulty accessing capital to refinance maturing loans. The spread in CMBX AAA Index is up another 65 bps to 635 bps, having surged 500 bps since September.
The Fed has lowered its 2008 GDP growth to zero from 1.3% in June. They see 2009 at 0.2%. We see it at minus 3%.
PricewaterhouseCoopers Trendsetter Barometer fell to a 16-year low in the 3rd quarter of 2008, with only 17% of CEO’s surveyed have a positive outlook. That’s 7 points lower than last quarter’s 24%. That is a decline from 64% in the 2nd quarter of 2007. CEO’s pessimistic about the economy a year out rose to 41% from 15% yoy.
There is something wrong in the Fannie Mae/Freddie Mac agency bond market. The spread has widened to 164 on 10-year paper, yet there is an explicit guarantee on the paper. Something is wrong. The foreigners are sellers and we do not know why yet.
The big world economies and their governments are all engaging in financial corruption, bailouts, currency rigging and blatant unfair competition, which can only lead to trade wars. Free trade is on the way out and it is only a matter of time before it is abandoned.
Citibank is liquidating its Corporate Special Opportunities hedge fund after it lost 53% of its value last month. This is Citi’s 9th closure of a hedge fund in recent months. SCO managed $4.2 billion at its peak, now has a net asset value of about $58 million and debt of about $800 million. Investors will probably receive $0.10 on the dollar. Genius CEO, Vikram Pandit, scores another failure. This fund was so bad off that with a Citi $450 million line of credit and equity infusions of $320 million they still couldn’t make it. Investors have been locked in for a year and now will receive a pittance. These are the Illuminist masters of the universe.
The tally of credit derivatives contracts outstanding globally fell 0.58% in the week to Nov. 14 to 2.419 million, valued at a total of $32.519 trillion as of that day, the Depository Trust and Clearing Corp. reported Tuesday.
The total amount of CDS outstanding fell 0.5% from $32.692 trillion in the week through Nov. 14. The clearinghouse also reported 14,145 contracts, worth $172.55 billion, were traded that week.
U.S. retail stores may be much less crowded this holiday season, as one research firm sees foot traffic sliding a record 9.9 percent as shoppers suffer from the weak economy and low consumer confidence.
US Building Permits decrease 12% to 0.708M in October.
Applications for U.S. home mortgages declined last week, with loans for purchases of single-family homes falling to their lowest level in nearly eight years, an industry group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage application activity fell 6.2 percent to 398.6 in the week ended Nov. 14.
The index was dragged lower as the MBA's gauge of loan requests earmarked for home purchases tumbled 12.6 percent to 248.5, the lowest level since the last week of December 2000. The index for refinancing applications edged higher to 1,281.2 from 1,248.4 in the previous week.
The U.S. housing slump, now in its third year, will likely linger as long as the mix of falling home prices and risky mortgages keep foreclosure rates rising, economists said. The financial markets crisis that erupted in September and October has worsened the outlook, leading banks to pull back on already tight credit for mortgages and other loans.
Fixed 30-year mortgage rates averaged 6.16 percent in the week, down 8 basis points from the prior week, the MBA said.
Factory activity in the U.S. Mid-Atlantic region fell to another 18-year low in November, a survey showed on Thursday.
The Philadelphia Federal Reserve Bank said its business activity index fell to minus 39.3 from minus 37.5 in October. Any reading below zero indicates contraction in the region's manufacturing sector.
Wall Street economists had expected a reading of minus 35.0, according to a Reuters poll. Their 62 forecasts ranged from minus 45.0 to minus 24.8.
The survey of factories in eastern Pennsylvania, southern New Jersey and Delaware is scrutinized as one of the first monthly indicators of the health of U.S. manufacturing.
A similar gauge for New York state tumbled in November to yet another record low in its seven-year history, the New York Federal Reserve said on Monday.
The number of Americans filing for unemployment benefits approached a 26-year high, and a gauge of the economy's future performance dropped, sending yields on benchmark Treasuries to record lows.
Initial jobless claims climbed to a higher-than-forecast 542,000 in the week ended Nov. 15, the Labor Department said today in Washington. The Conference Board's index of leading economic indicators declined 0.8 percent, and a measure of manufacturing in the Philadelphia region fell to an 18-year low.
The New York-based Conference Board said its monthly forecast of economic activity declined 0.8 percent in October, worse than the 0.6 percent decrease expected by economists surveyed by Thomson Reuters. Over the last seven months, the index declined at a 4.7 percent annual rate, faster than any decline since 2001.
A U.S. Senate subcommittee is opening a probe into causes of the global financial crisis, focusing in part on whether bond-ratings firms, driven by conflicts of interest, boosted mortgage investments which have since collapsed, the Wall Street Journal said.
The ranking Republican on the Senate's Permanent Subcommittee on Investigation, Senator Norm Coleman, told the WSJ in an interview that investigators want to know whether competition among firms led them to issue certain ratings in order to win business from banks.
"We're going to look at the root causes of this, looking at whether the inherent conflict clouded the judgment of the agencies," Senator Coleman said.
"We've instituted a number of initiatives to mitigate conflicts," a Moody's Investors Service spokesman told the paper.
McGraw-Hill Cos Inc's Standard & Poor's, Fimalac SA's Fitch Ratings and Moody's could not be immediately reached for comment by Reuters.
U.S. 30-year mortgage rates fell to an average of 6.04 percent from 6.14 percent in the week ending Nov. 20, while 15-year mortgage rates dipped to an average of 5.73 percent from 5.81 percent last week.
One-year adjustable rate mortgages, or ARMs, also dropped in the week to an average of 5.29 percent from 5.33 percent last week.
Freddie Mac said the "5/1" ARM, set at a fixed rate for five years and adjustable each following year, fell to an average of 5.87 percent from 5.98 percent a week earlier. A year ago, 30-year mortgage rates averaged 6.20 percent. 15-year mortgages 5.83 percent and the one-year ARM 5.42 percent. The 5/1 ARM averaged 5.88 percent.
The Federal Reserve Bank of Philadelphia reported Thursday that its index of general business activity moved to -39.3 from -37.5 in October and 3.8 in September. It had been expected to stand at -38.0. The November reading was the worst since October 1990.
Readings under zero denote contracting activity and describe the breadth of the change, but not the magnitude of the change seen by survey respondents.
Almost every aspect of the Philadelphia Fed report was beset by weakness. And given that this report is one of the first looks at activity within a given month, the weakness could herald that more nasty numbers are coming over the next several weeks.
What's more, "most of the survey's indicators of future activity slid further into negative territory this month, suggesting that the region's manufacturing executives expect continued declines over the next six months," the report said.
The report showed the inflationary pressures actually contracted in the current month, for the first time since July 2003, with the prices paid index moving to -30.7, from 7.2, and the prices received index hitting -15.5, from 5.3.
The bank's employment index came in at -25.2, from -18.0, while the new orders index stood at -31.4, after -30.5 in October. The shipments index was -18.8, unchanged from the prior month.
The composite index of leading indicators declined 0.8% in October, to 99.6, according to preliminary estimates by the Conference Board on Thursday.
The leading index for August was revised slightly lower to show a gain of 0.1%, instead of the 0.3% first reported.
Over the six months through October, the leading index declined 2.4%, considerably faster than the 1.2% decrease over the previous six months.
"Taken together, the persistent and extensive deterioration of the composite indexes continues to suggest that the economy is unlikely to improve soon, and economic activity may contract further near term," the Conference Board said in a statement.
In October, three out of the 10 indicators rose. The largest positive contributors to the index were real money supply, the interest rate spread and manufacturers' new orders for consumer goods and materials. The most significant negative contributors were stock prices, building permits and the index of consumer expectations.
...
THE INTERNATIONAL FORECASTER
SATURDAY, November 22, 2008 - 112208(7)_IF
P. O. Box 510518, Punta Gorda, FL 33951-0518
An international financial, economic, political and social commentary.
Published and Edited by: Bob Chapman
E-Mail Addresses:
international_forecaster@yahoo.com
if_distctr@yahoo.com
CHECK OUT OUR WEBSITE
www.theinternationalforecaster.com
1-YEAR $159.95 U.S. Funds
US AND CANADIAN SUBSCRIBERS: Make check payable to Robert Chapman (NOT International Forecaster), and mail to P.O. Box 510518, Punta Gorda, FL 33951-0518. Please include name, address, telephone number and e-mail address.
Or:
We accept Visa and MasterCard charges. Provide us with your card number and expiration date. We will charge your card US$159.95 for a one-year subscription.
You can email us in two separate emails (1- the Credit Card Number with full name, address and your telephone number and (2- the Expiration date on the card.
NON US OR CANADIANS SUBSCRIBERS:
Due to the time that it takes for your mail to arrive to us from a foreign country, we would like for you to email us as above the CC information in two separate emails.
Note: We publish twice a month by surface mail or twice a week by E-mail. international_forecaster@yahoo.com or if_distctr@yahoo.com
RADIO APPEARANCES:
To check out all of our radio appearances click on this link below:
http://www.theinternationalforecaster.com/radio
