The Financial Times has a thorough story today, “US seeks culprits for subprime,” on who is to blame for the subprime mess. Short answer: just about everybody involved. It isn’t until the fourth paragraph that the authors invoke the word “fraud” but that’s what it’s all about The piece recounts the sorry tale of the […]
Read more...Sunday’s New York Times features a story, “Mortgage Mania Didn’t Grip Everyone,” by Gretchen Morgenson on Michael A. J. Farrell, chief executive of Annaly Capital Management, a high-grade mortgage real estate investment trust, who has stuck strictly with high grade mortgage paper (despite considerable pressure from investors in recent years) and is coming through this […]
Read more...Currently docked in Marseille (managed to get a Financial Times yesterday in Monaco, so I feel slightly less cut off from the symbol world) and catching up on the grim market news of yesterday. It seems that the equity markets are getting the message that things are bad enough in the credit markets so as […]
Read more...Jim Rogers, who is by no means a card carrying bear, thinks the US housing market, and therefore homebuilder and investment bank stocks, still have further to fall. And the news of the last few days provides confirming data points. First, this morning’s Wall Street Journal has as a page one story a news item […]
Read more...If credit default swaps prices are a valid indicator, the fixed income markets are regrouping. Prices, which spiked up earlier this week on panic buying of risk protection, have eased off. However, while this decline is a good sign, note that it does not equate (yet) to an improvement of liquidity in the riskier sectors […]
Read more...The New York Times’ Floyd Norris, in “In This Mess, Finger Pointing Is in Style,” discussed who might be responsible for the subprime woes and included this tidbit: Who’s to blame for the subprime mortgage mess? It’s the lenders, says William Poole, the president of the Federal Reserve Bank of St. Louis. As he sees […]
Read more...Today’s Financial Times has a good piece on the turmoil in the markets yesterday, which has continued into Asian markets today (although Europe appears to be staging a recovery). There were two noteworthy elements in this article, namely the divergence between the equity and credit market perspectives, the second on Bernanke’s posture. On the first […]
Read more...The drumbeat of grim news on the housing front continues apace. From the Financial Times: Peter Kretzmer, an economist at Bank of America, said: “We are in the second wave of declining home sales. The first wave was the breaking of the upward momentum and flattened out late last year. But now we are seeing […]
Read more...The New York Times gave a succinct summary of conventional wisdom on yesterday’s stock market drop: Countrywide’s stark assessment signaled a critical change in the substance and tenor of how housing executives are publicly describing the market. Just a couple of months ago, some executives were predicting a relatively quick recovery and saying that most […]
Read more...The Financial Times’ Paul Davies has written a good short piece on the basics of CDOs, which is useful if you are ever in the unfortunate position of having to explain them to someone new to the concept. He also suggests that subprime-related CDOs going pear shaped is not an indictment of the technology. Nevertheless, […]
Read more...Floyd Norris has an article in today’s New York Times, “Market Shock: AAA Rating May Be Junk,” that is enough off the mark to be annoying. The problem with the article isn’t so much inaccuracy as superficiality. Norris points out correctly that a lot of buyers are waking up to the unpleasant reality that that […]
Read more...Tanta at Calculated Risk reported on Fitch’s downgradesof two mortgage trusts. The amount at issue isn’t large. For each of the two First Horizon Home Loan Mortgage Trust issues (series 2006 AA-3 and Series 2006-F-2), Fitch downgraded the lowest two tranches (the BB tranche became B+, the B tranche was downgraded to CCC and and […]
Read more...Today was the day that Bear Stearns was to issue its delayed report on the net asset value of its two failed hedge funds. As we had indicated, investors who had tried selling their interests for 11% of their April value did getting any takers. There had been bids of 5% on the more leveraged […]
Read more...There was cheery talk of the rally in Treasuries Monday, but that was in large part due to a continued flight from risk. One symptom was that the riskiest ABX index, ABX.HE 7-01, which is a proxy for recent vintage BBB- subprimes, took a nosedive and then recovered, Traders used swords like “panic” rather than […]
Read more...A good old-fashioned showdown is set for this week between the Congress and the Fed. Congressmen are hoppin’ mad at the Fed’s failure not only to act to stem overheated and sometimes predatory subprime lending, but also its patent lack of enthusiasm in doing anything to keep this and other predatory practices from recurring. And […]
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