SEOUL, Oct 20- For a country trying to avoid the menace of deflation, South Korea is receiving timely help from unusual quarters- the country's landlord and their tenants. Nomura estimates that there was some $400 billion tied up in jeonse deposits in 2012, equal to one-third of South Korea's annual economic output. "The sharp drop in interest rates is the most...» Read More
Let me just preface by saying that I don't make a habit of commenting on what other colleagues at CNBC say. It's neither prudent, nor necessary. I also didn't even plan on blogging this week; I'm on vacation for crying out loud! But my BlackBerry was buzzing off the base this weekend, with housing bloggers begging me to respond to Jim Cramer's outcry on Friday about the Fed and the mortgage market. So let me just blog here respectfully.
U.S. stocks futures are slightly firmer ahead of the opening in a market still cranky about credit worries and pondering the Fed's next move. European stock markets are mixed after trading lower this morning, and Asian stocks were lower overnight.
The recent market selloff has been quick and painful for many investors but market strategists say large cap multinational U.S. companies remain a good bet as the globalization story remains intact.
“They’re pulling themselves out of the market to regroup,” is what one of my mortgage broker buddies told me on the phone this morning when I asked how in the heck Wells Fargo could raise rates on a 30-year jumbo fixed rate mortgage from 6 7/8% to 8% overnight. A jumbo is anything over $417,000, and given today’s home prices, that’s going to hit an awful lot of borrowers.
If I’m wrong, then I’m the first one to say it. But I have to say; I can’t believe I’m wrong about this. Given all the news, data, analysis, and sheer emotion of the current downturn in the housing market, you would think an awful lot of Americans would be worried, concerned, maybe a little, well, interested? Maybe not so much.
The European Central Bank kept its core lending rate at 4% Thursday, as widely expected, but a hike in September was signaled. The Bank of England also held steady, leaving rates at 5.75%.
One rumor on the floor that Beazer might be in trouble and -- boom -- the whole sector drops like a brick. I run around calling all the analysts I know, and one by one they say it's all unfounded -- yeah, Beazer has some issues with litigation and its lending practices, and there's that SEC investigation that was announced as "formal" last week, but overall they're in no worse position than any of the other beleaguered home builders. Their stock may be, but the company isn't.
A selling wave in global stock markets is sweeping futures lower this morning as subprime and credit woes once more rise to the surface. A new disclosure about a third troubled hedge fund at Bear Stearns is rattling investors.
So it’s only a few hours after I blogged about C-Bass and American Home Mortgage is providing a crystal ball. Shares of AHM are down 87% after the company said it just can’ fund all those home loans and may have to liquidate its assets. It’s the margin calls, same as C-Bass.
What’s the worst business to be in nowadays? No, not Lindsay Lohan’s PR agent. Try a company that buys troubled subprime mortgages, improves collection rates and then sells them at a profit as packages of debt to hungry investors. That might have been a fun business last year; not so much this year.
Stocks are ready to spring higher on the opening as economic data, earnings and some merger news gets investor attention this morning. GM's better-than-expected earnings report is adding a positive tone.
I was looking for some information this morning on just how much more it will cost you to get a loan today than it did just a year ago today, and I came upon a survey from the Federal Reserve that is really indicative of just how much the playing field has changed. For several decades the Fed has been doing a Loan Officer Survey, asking a slew of senior bank guys if they’re tightening their standards on residential mortgages.
Futures are perking up this morning and are setting stocks up for a firmer opening. Traders are turning their attention to earnings and some percolating merger news, and there's a calm on Wall Street after Friday's late day, mad dash down-hill ride for stocks.
Bad news in the housing market this week was enough to rock the stock market right off its foundations. Existing home sales, new home sales, homebuilder earnings reports, no one expected them to be bright, but the numbers cast a heavy shadow on any optimism for a quick recovery in housing.
I have to say that given the earnings of the major public homebuilders that I’ve been reporting all week, Hovnanian CEO Ara Hovnanian’s comments on CNBC this morning made me wonder if his rose-colored glasses weren’t perhaps impairing his vision entirely. No offense at all to the CEO, who, I’m happy to say, is one of very few of his ilk right now that will actually agree to go on TV and speak his mind. The rest have been turning down our requests, several even telling me that I personally make them look foolish.
How are some home builder CEOs reacting to the current housing market? Donald R. Horton, CEO D.R. Horton: “Market conditions in the homebuilding industry continue to be challenging as inventory levels of both new and existing homes remain at historically high levels. Increased use of sales incentives continues to put pressure on profit margins. In addition, home price appreciation over the past few years, higher interest rates and tightened credit standards in the mortgage industry are all negatively impacting affordability.”
Credit worries and bad news from home builders trumped any positives from the stream of earnings being reported this morning. Wall Street is set up for a steep drop on the opening and the talk in the market focuses on whether the takeover boom is ending.
New Zealand's central bank raised interest rates by a quarter of a point to 8.25% on Thursday, as expected, but said it did not expect to raise them further as it saw signs of an easing in domestic borrowing.
The high-yield corporate bond market has gone through "a dramatic earthquake" in the past six weeks because of surging interest rates, Pimco founder and chief investment officer Bill Gross told CNBC.
So there I was at the National Association of Realtors headquarters this morning, ready for the usual press conference on the monthly existing home sales numbers, but before the 'spiel' and the charts, the PR team passed out two interesting papers: “Fact Sheet” they each blared across the top in bold print.