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STOCK MARKET WATCH -- Friday, 28 September 2012
[font size=3]STOCK MARKET WATCH, Friday, 28 September 2012[font color=black][/font]
SMW for 27 September 2012
AT THE CLOSING BELL ON 27 September 2012
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Dow Jones 13,485.97 +72.46 (0.54%)
S&P 500 1,447.15 +13.83 (0.96%)
[font color=black]Nasdaq 3,136.60 0.00 (0.00%)
[font color=red]10 Year 1.65% +0.01 (0.61%)
30 Year 2.84% +0.03 (1.07%) [font color=black]
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[font size=2]Market Conditions During Trading Hours[/font]
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[font size=2]Euro, Yen, Loonie, Silver and Gold[center]
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[font color=black][font size=2]Handy Links - Market Data and News:[/font][/font]
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Economic Calendar
Marketwatch Data
Bloomberg Economic News
Yahoo Finance
Google Finance
Bank Tracker
Credit Union Tracker
Daily Job Cuts
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[font color=black][font size=2]Handy Links - Economic Blogs:[/font][/font]
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The Big Picture
Financial Sense
Calculated Risk
Naked Capitalism
Credit Writedowns
Brad DeLong
Bonddad
Atrios
goldmansachs666
The Stand-Up Economist
The Automatic Earth
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[font color=black][font size=2]Handy Links - Government Issues:[/font][/font]
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LegitGov
Open Government
Earmark Database
USA spending.gov
[/center][font color=black][font size=2]Handy Links - Videos:[/font][/font]
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Charlie Rose talks with Roubini
Charlie Rose talks with Krugman
William Black: This Economic Disaster
Bill Moyers with Kevin Drum and David Corn
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[font color=red]Partial List of Financial Sector Officials Convicted since 1/20/09 [/font][font color=red]
2/2/12 David Higgs and Salmaan Siddiqui, Credit Suisse, plead guilty to conspiracy involving valuation of MBS
3/6/12 Allen Stanford, former Caribbean billionaire and general schmuck, convicted on 13 of 14 counts in $2.2B Ponzi scheme, faces 20+ years in prison
6/4/12 Matthew Kluger, lawyer, sentenced to 12 years in prison, along with co-conspirator stock trader Garrett Bauer (9 years) and co-conspirator Kenneth Robinson (not yet sentenced) for 17 year insider trading scheme.
6/14/12 Allen Stanford sentenced to 110 years without parole.
6/15/12 Rajat Gupta, former Goldman Sachs director, found guilty of insider trading. Could face a decade in prison when sentenced later this year.
6/22/12 Timothy S. Durham, 49, former CEO of Fair Financial Company, convicted of one count conspiracy to commit wire and securities fraud, 10 counts of wire fraud, and one count of securities fraud.
6/22/12 James F. Cochran, 56, former chairman of the board of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and six counts of wire fraud.
6/22/12 Rick D. Snow, 48, former CFO of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and three counts of wire fraud.
7/13/12 Russell Wassendorf Sr., CEO of collapsed brokerage firm Peregrine Financial Group Inc. arrested and charged with lying to regulators after admitting to authorities he embezzled "millions of dollars" and forged bank statements for "nearly twenty years."
8/22/12 Doug Whitman, Whitman Capital LLC hedge fund founder, convicted of insider trading following a trial in which he spent more than two days on the stand telling jurors he was innocent
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[font size=3][font color=red]This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.[/font][/font][/font color=red][font color=black]
65 replies
= new reply since forum marked as read
= new reply since forum marked as read
Cape May is the country's oldest seaside resort and the entire town is a National Historic Landmark. The area is also well known for birding, and is lesser known as the birthplace of Paul Volcker.
I'll be flying back to FL in exactly one from about right now.
So, what's the weather up there like right now? Do I need my bomber jacket? I'm assuming my flip flops won't be the best? 
http://www.nakedcapitalism.com/2012/09/sheila-bair-gives-her-account-of-the-crisis-and-quelle-surprise-the-bailouts-and-geithner-do-not-look-pretty.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29
Sheila Bair’s new book Bull by the Horns is out and based on early reports, it looks like it skewers the bailouts in general and Tim Geithner in particular. But it also gets a lot into the weeds in what still needs to be fixed in bank-land, which is a part of these crisis post-mortems and retrospectives that too often get short shrift.
Rolfe Winkler at the Wall Street Journal has an informative chat with her about the book and her experience during the crisis. Despite her understated demeanor, she says some pretty eye-opening stuff, for instance, that Geithner was on the phone all the time during the worst of the crisis with Citigroup chief Pandit, with the aim of end running her. She similarly gets in an adept dig at Geithner’s lack of oversight while at the NY Fed and his relationship with his mentor Bob Rubin who was then on Citi’s board, [s]fiddling while the bank burned[/s] pulling down over $10 million a year during his time with the bank. As William Cohan noted:
She also says that Andrew Ross Sorkin didn’t speak to her at all in his research on his book Too Big to Fail, which tried to depict Bair as “not a team player” (a kiss of death in big government jobs) and a grandstander.
Oh, and her book has a nice shout out to NC readers! And this should also tell you that signing petitions can actually be productive (hat tip Moe Tkacik):
VIDEO INTERVIEW OF BAIR AT LINK, TOO
Sheila Bair’s new book Bull by the Horns is out and based on early reports, it looks like it skewers the bailouts in general and Tim Geithner in particular. But it also gets a lot into the weeds in what still needs to be fixed in bank-land, which is a part of these crisis post-mortems and retrospectives that too often get short shrift.
Rolfe Winkler at the Wall Street Journal has an informative chat with her about the book and her experience during the crisis. Despite her understated demeanor, she says some pretty eye-opening stuff, for instance, that Geithner was on the phone all the time during the worst of the crisis with Citigroup chief Pandit, with the aim of end running her. She similarly gets in an adept dig at Geithner’s lack of oversight while at the NY Fed and his relationship with his mentor Bob Rubin who was then on Citi’s board, [s]fiddling while the bank burned[/s] pulling down over $10 million a year during his time with the bank. As William Cohan noted:
After he stepped away from Treasury in 1999, Rubin moved to Citigroup, and until 2009 he served as chairman of the executive committee and, briefly, chairman of the board of directors. On his watch, the federal government was forced to inject $45 billion of taxpayer money into the company and guarantee some $300 billion of illiquid assets. Taxpayers ended up with a 27 percent stake in Citigroup, which was sold in 2010 at a cumulative profit of $12 billion. Rubin gave up a portion of his contracted compensation–and was still paid around $126 million in cash and stock during a tenure in which his serenity has come to look a lot more like paralysis. “Nobody on this planet represents more vividly the scam of the banking industry,” says Nassim Nicholas Taleb, author of The Black Swan. “He made $120 million from Citibank, which was technically insolvent. And now we, the taxpayers, are paying for it.”
She also says that Andrew Ross Sorkin didn’t speak to her at all in his research on his book Too Big to Fail, which tried to depict Bair as “not a team player” (a kiss of death in big government jobs) and a grandstander.
Oh, and her book has a nice shout out to NC readers! And this should also tell you that signing petitions can actually be productive (hat tip Moe Tkacik):
VIDEO INTERVIEW OF BAIR AT LINK, TOO
http://www.nakedcapitalism.com/2012/09/on-ficos-dubious-explanation-of-why-it-treats-short-sales-the-same-as-foreclosures.html
...a recent piece by FICO... warrants further discussion. The FICO article attempted to justify its position that someone who enters into a short sale gets his credit score dinged as badly as for a foreclosure. Yes, you read that correctly. One of the reasons many borrowers go to the effort to arrange a short sale, as opposed to the faster and easier process of “jingle mail” is that they assume that the damage to their credit score will be lower.
Here is the rationale, per FICO’s Banking Analytics blog (emphasis theirs):
Gee, even though there is a big difference between a 72% default rate and a 55.1% default rate (as in 30%), FICO says this doesn’t matter, 1 in 2 is so bad that they don’t care how much worse nearly 2 in 3 is relative to that.
But there is a pretty serious problem with their argument. Go look at the itty bitty print under that table. The people that are counted in this study first started looking wobbly in the 2007 to 2009 period. As readers may recall, that was during the big subprime reset period. Those folks were much less salvageable than the current wave of defaulters, who are being hit by traditional causes of default: job loss or wage reductions, divorce, medical emergency, with more than usual in the first category thanks to the lousy state of the economy.
A second reason that it’s dubious to apply conclusions from that period to now is servicers have changed their posture on short sales. Until very recently, they were uncooperative, to the point that in Los Angeles, homeowners would have state in their listings that they were not looking for a short sale because brokers would not even bother showing buyers those homes. They knew the banks would jerk them around and they didn’t want to waste their and their customers’ time. So anyone who got a short sale during this time period had to very persistent and/or very lucky (perhaps in a home with a mortgage on the bank’s balance sheet, where you’d see more willingness to reduce losses than on a serviced loan).
MORE AT LINK
...a recent piece by FICO... warrants further discussion. The FICO article attempted to justify its position that someone who enters into a short sale gets his credit score dinged as badly as for a foreclosure. Yes, you read that correctly. One of the reasons many borrowers go to the effort to arrange a short sale, as opposed to the faster and easier process of “jingle mail” is that they assume that the damage to their credit score will be lower.
Here is the rationale, per FICO’s Banking Analytics blog (emphasis theirs):
One of the questions we get asked most often is whether it remains appropriate for the scoring model to treat a short sale in a manner similar to a foreclosure….
…we conducted a study isolating more recent occurrences of mortgage stress events. By studying the subsequent performance of these borrowers on all accounts, we determined the credit risk associated with their mortgage events. Looking at data from October 2009 to October 2011, we were able to verify that short sales and other events of recent mortgage distress continue to represent a high degree of risk. These results closely match earlier studies of the risk associated with short sales and other events of mortgage stress.
As the graph below shows, short sales remain extremely risky. However, foreclosures have a bad rate of 72.0% while short sales have a better bad rate of 55.1%. Should that lead to less punitive treatment for short sales?
While it is true that short sales represent slightly better risk than foreclosures, they do not perform well enough to merit a more positive treatment in the FICO® Score. Here’s why. In the population we studied, one out of every two borrowers who experienced a short sale went on to default on another account within two years. That is exceptionally high risk. Additionally, the overwhelming majority of consumers with short sales have some other evidence of mortgage delinquency.
From a weighting perspective, all these mortgage events – short sale, foreclosure, deed in lieu – fall into the same heavyweight class, because they correlate with exceptional riskiness. They aren’t alone in that class either. Based on the data, consumers with short sales perform no better than consumers who have a severe delinquency (90+ days past due), a collection, or a derogatory public record (e.g., bankruptcy, tax lien, etc.) on file.
By comparison, only about one in every 50 borrowers with a score in the high 700s will default on one of their credit obligations. This strong separation of goods from bads is what makes FICO® Scores so useful.
…we conducted a study isolating more recent occurrences of mortgage stress events. By studying the subsequent performance of these borrowers on all accounts, we determined the credit risk associated with their mortgage events. Looking at data from October 2009 to October 2011, we were able to verify that short sales and other events of recent mortgage distress continue to represent a high degree of risk. These results closely match earlier studies of the risk associated with short sales and other events of mortgage stress.
As the graph below shows, short sales remain extremely risky. However, foreclosures have a bad rate of 72.0% while short sales have a better bad rate of 55.1%. Should that lead to less punitive treatment for short sales?
While it is true that short sales represent slightly better risk than foreclosures, they do not perform well enough to merit a more positive treatment in the FICO® Score. Here’s why. In the population we studied, one out of every two borrowers who experienced a short sale went on to default on another account within two years. That is exceptionally high risk. Additionally, the overwhelming majority of consumers with short sales have some other evidence of mortgage delinquency.
From a weighting perspective, all these mortgage events – short sale, foreclosure, deed in lieu – fall into the same heavyweight class, because they correlate with exceptional riskiness. They aren’t alone in that class either. Based on the data, consumers with short sales perform no better than consumers who have a severe delinquency (90+ days past due), a collection, or a derogatory public record (e.g., bankruptcy, tax lien, etc.) on file.
By comparison, only about one in every 50 borrowers with a score in the high 700s will default on one of their credit obligations. This strong separation of goods from bads is what makes FICO® Scores so useful.
Gee, even though there is a big difference between a 72% default rate and a 55.1% default rate (as in 30%), FICO says this doesn’t matter, 1 in 2 is so bad that they don’t care how much worse nearly 2 in 3 is relative to that.
But there is a pretty serious problem with their argument. Go look at the itty bitty print under that table. The people that are counted in this study first started looking wobbly in the 2007 to 2009 period. As readers may recall, that was during the big subprime reset period. Those folks were much less salvageable than the current wave of defaulters, who are being hit by traditional causes of default: job loss or wage reductions, divorce, medical emergency, with more than usual in the first category thanks to the lousy state of the economy.
A second reason that it’s dubious to apply conclusions from that period to now is servicers have changed their posture on short sales. Until very recently, they were uncooperative, to the point that in Los Angeles, homeowners would have state in their listings that they were not looking for a short sale because brokers would not even bother showing buyers those homes. They knew the banks would jerk them around and they didn’t want to waste their and their customers’ time. So anyone who got a short sale during this time period had to very persistent and/or very lucky (perhaps in a home with a mortgage on the bank’s balance sheet, where you’d see more willingness to reduce losses than on a serviced loan).
MORE AT LINK
http://www.guardian.co.uk/business/2012/sep/27/us-gdp-growth-estimate-revised-down
Assembly line worker Carrie Atwood moves a seat into position at the General Motors Hamtramck Assembly plant in Michigan Photograph: Paul Sancya/AP
The fragile state of the US's economic recovery was thrown into focus once more Thursday as the government announced growth was slowing and orders for long-lasting goods plunged in August, the latest sign of a weakening manufacturing sector.
US gross domestic product (GDP) – the broadest measure of the economy – grew at an annual rate of 1.3% between April and June, the commerce department said Thursday. The figure was revised down from a previously reported 1.7% gain.
Meanwhile the commerce department said durable goods orders fell 13.2% last month, the largest fall since January 2009. The measure of orders for goods designed to last three months or more is a key indicator of economic growth.
The decrease followed three consecutive monthly increases including a 3.3% rise in July. August's figure was a seasonally adjusted $198.49bn, the lowest dollar figure since February 2011, and far below most economists predictions.
Assembly line worker Carrie Atwood moves a seat into position at the General Motors Hamtramck Assembly plant in Michigan Photograph: Paul Sancya/AP
The fragile state of the US's economic recovery was thrown into focus once more Thursday as the government announced growth was slowing and orders for long-lasting goods plunged in August, the latest sign of a weakening manufacturing sector.
US gross domestic product (GDP) – the broadest measure of the economy – grew at an annual rate of 1.3% between April and June, the commerce department said Thursday. The figure was revised down from a previously reported 1.7% gain.
Meanwhile the commerce department said durable goods orders fell 13.2% last month, the largest fall since January 2009. The measure of orders for goods designed to last three months or more is a key indicator of economic growth.
The decrease followed three consecutive monthly increases including a 3.3% rise in July. August's figure was a seasonally adjusted $198.49bn, the lowest dollar figure since February 2011, and far below most economists predictions.
http://www.guardian.co.uk/business/economics-blog/2012/sep/28/blame-austerity-mania-breaks-euro
Another anti-austerity protest in Spain. Photograph: Guillem Valle/Corbis
Austerity mania is sweeping Europe. François Hollande's socialist government in France will become the latest to tighten its belt when it announces €30bn (£25bn) of spending cuts and tax increases on Friday. This follows Spain's decision to take around €40bn out of its budget with the aim of hitting deficit reduction targets agreed with Brussels.
Meanwhile, negotiations continue in Athens between Greece and the so-called troika (the International Monetary Fund, the European Central Bank and the European Union) over a fresh package of spending cuts and tax increases now estimated at €13.5bn.
All this is happening at a time when the eurozone economy is already going backwards. France announced zero growth in the second quarter – extending its period of stagnation to nine months. Spain's central bank warned earlier this week that the economy was currently contracting sharply, while Greece is already in the midst of a 1930s-style depression.
The austerity programmes come with pledges of economic reforms. Put simply, the idea is that too many eurozone countries have been feather-bedded for too long and now need a chill blast of reality to wake them up. Budget retrenchment will ensure that countries live within their means while deregulation, privatisation and more flexible labour markets will make them leaner and fitter. Before too long a revitalised Europe will be punching above its weight in the global economy.
Another anti-austerity protest in Spain. Photograph: Guillem Valle/Corbis
Austerity mania is sweeping Europe. François Hollande's socialist government in France will become the latest to tighten its belt when it announces €30bn (£25bn) of spending cuts and tax increases on Friday. This follows Spain's decision to take around €40bn out of its budget with the aim of hitting deficit reduction targets agreed with Brussels.
Meanwhile, negotiations continue in Athens between Greece and the so-called troika (the International Monetary Fund, the European Central Bank and the European Union) over a fresh package of spending cuts and tax increases now estimated at €13.5bn.
All this is happening at a time when the eurozone economy is already going backwards. France announced zero growth in the second quarter – extending its period of stagnation to nine months. Spain's central bank warned earlier this week that the economy was currently contracting sharply, while Greece is already in the midst of a 1930s-style depression.
The austerity programmes come with pledges of economic reforms. Put simply, the idea is that too many eurozone countries have been feather-bedded for too long and now need a chill blast of reality to wake them up. Budget retrenchment will ensure that countries live within their means while deregulation, privatisation and more flexible labour markets will make them leaner and fitter. Before too long a revitalised Europe will be punching above its weight in the global economy.
http://www.guardian.co.uk/politics/2012/sep/27/labour-public-spending-ed-balls
Ed Balls says a budget review would report within a year after the next election should Labour find itself back in No 10. Photograph: Linda Nylind for the Guardian
An incoming Labour government will introduce a root and branch budget review to examine every penny of public spending, Ed Balls the shadow chancellor tells the Guardian.
The budget review, expected to report within a year after the next election should Labour find itself back in No 10, is designed to look at the purpose and value of all public spending against the backdrop of some of the toughest long term tax and spending challenges to face the postwar Labour party.
The move – under discussion within the Labour leadership for months – is designed to signal that the party understands the scale of the public spending challenge facing the country.
Balls said: "The public want to know that we are going to be ruthless and disciplined in how we go about public spending. For a Labour government in 2015, it is quite right, and the public I think would expect this, to have a proper zero-based spending review where we say we have to justify every penny and make sure we are spending in the right way."
Ed Balls says a budget review would report within a year after the next election should Labour find itself back in No 10. Photograph: Linda Nylind for the Guardian
An incoming Labour government will introduce a root and branch budget review to examine every penny of public spending, Ed Balls the shadow chancellor tells the Guardian.
The budget review, expected to report within a year after the next election should Labour find itself back in No 10, is designed to look at the purpose and value of all public spending against the backdrop of some of the toughest long term tax and spending challenges to face the postwar Labour party.
The move – under discussion within the Labour leadership for months – is designed to signal that the party understands the scale of the public spending challenge facing the country.
Balls said: "The public want to know that we are going to be ruthless and disciplined in how we go about public spending. For a Labour government in 2015, it is quite right, and the public I think would expect this, to have a proper zero-based spending review where we say we have to justify every penny and make sure we are spending in the right way."
I thank you all!
what "one" can...you do DU proud, my friend.
http://www.businessinsider.com/august-personal-income-and-spending-2012-9
At first blush, today's personal income and spending news looks like kind of a snooze.
But actually it's not good.
Personal income rose by just 0.1% vs. expectations of a 0.2% rise.
And last month's personal income number rose by only 0.1% vs. original estimates of 0.3%, so that's a downward move of some significance.
Spending held up, rising 0.5%, but that's going to be tough to maintain if earnings keep falling.
Read more: http://www.businessinsider.com/august-personal-income-and-spending-2012-9#ixzz27lg5hU80
At first blush, today's personal income and spending news looks like kind of a snooze.
But actually it's not good.
Personal income rose by just 0.1% vs. expectations of a 0.2% rise.
And last month's personal income number rose by only 0.1% vs. original estimates of 0.3%, so that's a downward move of some significance.
Spending held up, rising 0.5%, but that's going to be tough to maintain if earnings keep falling.
Read more: http://www.businessinsider.com/august-personal-income-and-spending-2012-9#ixzz27lg5hU80
http://www.businessinsider.com/roubini-social-unrest-brewing-in-france-2012-9
***SNIP
Roubini says that France is currently on "honeymoon" with French investors who have cut their holdings of PIIGS debt and rotated into French sovereign debt due to a "home bias."
However, according to Roubini, "many problems are brewing in France" at the moment, and there are a few reasons for serious concern if you're holding French bonds.
Roubini gives four, which we summarize here:
Growth is stalling and could go negative next year if austerity is enacted. Unemployment is already rising.
"Hollande was not elected by his base to pursue austerity and reforms, but rather to boost growth and hiring in the public sector," writes Roubini. Talks of austerity is causing unions to become restless and riots could begin among the poor and affected minorities.
Government revenues are around 50% of GDP and economic contraction will increasingly put pressure on the deficit. This will make achieving a balance budget through spending cuts extremely difficult.
Some policy decisions are upsetting the business and financial community. Bernard Arnault left France over talks of a 75% marginal tax rate on the wealthy.
Read more: http://www.businessinsider.com/roubini-social-unrest-brewing-in-france-2012-9#ixzz27liEEknw
***please don't turn out like the austrian minded socialists monsieur hollande.
***SNIP
Roubini says that France is currently on "honeymoon" with French investors who have cut their holdings of PIIGS debt and rotated into French sovereign debt due to a "home bias."
However, according to Roubini, "many problems are brewing in France" at the moment, and there are a few reasons for serious concern if you're holding French bonds.
Roubini gives four, which we summarize here:
Growth is stalling and could go negative next year if austerity is enacted. Unemployment is already rising.
"Hollande was not elected by his base to pursue austerity and reforms, but rather to boost growth and hiring in the public sector," writes Roubini. Talks of austerity is causing unions to become restless and riots could begin among the poor and affected minorities.
Government revenues are around 50% of GDP and economic contraction will increasingly put pressure on the deficit. This will make achieving a balance budget through spending cuts extremely difficult.
Some policy decisions are upsetting the business and financial community. Bernard Arnault left France over talks of a 75% marginal tax rate on the wealthy.
Read more: http://www.businessinsider.com/roubini-social-unrest-brewing-in-france-2012-9#ixzz27liEEknw
***please don't turn out like the austrian minded socialists monsieur hollande.