The Big Picture | February 2008

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Roll Out the Barrel . . .

Friday, February 29, 2008 | 04:00 PM

in Commodities | Consumer Spending | Energy

We'll have a barrell of fun!

~~~

Batten Down the Hatches!

Friday, February 29, 2008 | 03:48 PM

in Markets | Psychology/Sentiment | RR&A | Trading

NOTE: This Market Commentary alert was originally emailed to subscribers at Ritholtz Research & Analytics on Tues 2/29/2008 before the market closed.

This is posted here not as investing advice, but rather as an example of a trading call for potential subscribers.

>>>

Several weeks ago, we discussed the likelihood of a tradable low being put in place. On January 23, 2008, we thought conditions were in place that would allow agile traders to play for a bounce -- but advised that long-term investors avoid the sloppy tape. At that time, we suggested an 8, 10, or 12% bounce trade was in the offing.

That has come to pass. We now find ourselves in a situation where the markets have rallied significantly on lighter volume, and have since rolled over. This is a significant sell signal.

Consider: Over the past month we have seen one-day rallies of nearly 200 Dow Jones points on four separate occasions. A review of the headlines shows all too infrequent arguments against the possibility of a recession, or if there is a recession it being mild and fairly discounted by the equity markets. The economic news continues to worsen, while the Bulls maintain a steadfast state of denial. Articles abound, explaining why there won’t be a recession, or if there is a recession, it will be mild and is already priced into equities. My favorite piece last week was “How to play the coming recovery.” These are signs that people are still speculatively inclined, are buying the dips. The bigger fear is not any on stocks, but missing the rally. That is not what you see at market bottoms.

These optimistic views are increasingly being proven false. We are now in a Bear market and are in all likelihood in the beginning quarters of a recession – one that is potentially deep and long lasting. Housing inventories are at record highs, the US dollar is at record lows, Oil is over $100 a barrel, and Gold has set all-time highs.

These are not the sort of conditions that lend themselves to economic growth or stock gains.

As of leap day, February 29, 2008, you have several choices ahead of you: a) you can try and catch the falling knife and, an activity that in the past has proven to be dangerous and painful; b) You can sit tight, watching your portfolio decrease in value, confident in the belief that stocks will eventually return to their previous valuations (What is unknown now is whether that will take months or years to occur; c) Or, you can aggressively become even more defensive than we have advocated in the past few quarters. Preserve precious capital, wait out the storm.

We choose “C.”

We will go into greater details on the economy in a future missive, but for now, from an investor's standpoint, understand what your role is today and preserve capital, and be cognizant of risks. Now is the time to Batten down the hatches to preserve capital and to wait patiently for the greater opportunities that will exist to play equity's on the long side. Rallies are opportunities to exit equities. We are constantly looking for better opportunities to put your hard earned capital to work, and today, the in a long side of US equities is not it.

-Barry Ritholtz
February 29, 2008

Lindsay!

Friday, February 29, 2008 | 02:55 PM

in Video

Walking back from a lunch meeting, and who do I bump into? Lindsey from WallStrip ! She is interviewing people on the street, asking them about the G-Spot, when I recognize her, and stop to say hello.

She asks me about the G-Spot. I respond that since a C-Spot is a $100, a G-spot must be a $1,000. Also, I tell her the female orgasm is a myth.

We do "Long/Short," and I admit to being long female orgasms and short equities.

Fun stuff. Except for the people who don't know my sense of humor, and say "Who is this pinhead who thinks the female orgasm is a myth?

Leveraged Losses: Lessons from the Mortgage Market Meltdown

Friday, February 29, 2008 | 12:15 PM

in Credit | Data Analysis | Derivatives | Economy | Real Estate

My buddy Paul is off skiing in Aspen, Colorado leaving us worker drones to do the heavy lifting. Ski boy managed to forward me this report: Leveraged Losses: Lessons from the Mortgage Market Meltdown.

The abstract and graphs below are quite compelling:

"This report discusses the implications of the recent financial market turmoil for central banks. We start by characterizing the disruptions in the financial markets and compare these dislocations to previous periods of financial stress. We confirm the conventional view that the current problems in financial markets are concentrated in institutions that have exposure to mortgage securities. We use several methods to estimate the ultimate losses on these securities. Our best (very uncertain) guess is that the losses will total about $400 billion, with about half being borne by leveraged U.S. financial institutions. We then highlight the role of leverage and mark-to-market accounting in propagating this shock. This perspective implies an estimate of the eventual contraction in balance sheets of these institutions, which will include a substantial reduction in credit to businesses and households. We close by exploring the feedback from credit availability to the broader economy and provide new evidence that contractions in financial institutions balance sheets’ cause a reduction in real GDP growth."

I've plowed thru most of it; THIS IS YOUR MUST READ HOMEWORK ASSIGNMENT FOR THE WEEKEND!

UPDATE: February 29, 2:30pm

Just got back from a lunch meeting (bumped into Lindsey from WallStrip on the way back!) and saw the WSJ Real Time Economics post on this:

Banks May Need to Shrink by $2 Trillion on Subprime Losses

Mortgage losses, compounded by contemporary risk management and accounting practices could prompt banks and other lenders to shrink their lending and other assets by a staggering $2 trillion, a new study concludes.

The resulting withdrawal of credit could knock one to 1.5 percentage points off economic growth, significantly compounding the impact of collapsing home construction and softer consumer spending due to lower home wealth, the study, presented at a joint academic-Wall Street forum in New York Friday.

The study is one of the most exhaustive efforts to date to pinpoint the scale and location of mortgage losses and how those losses will affect economic growth.

Source:

Leveraged Losses: Lessons from the Mortgage Market Meltdown
David Greenlaw, Jan Hatzius, Anil K Kashyap, Hyun Song Shin
US Monetary Policy Forum Conference Draft, February 29, 2008
http://www.brandeis.edu/global/rosenberg_institute/usmpf_2008.pdf

Download usmpf_2008.pdf

Banks May Need to Shrink by $2 Trillion on Subprime Losses
Greg Ip
WSJ Real Time Economics, February 29, 2008, 11:59 am
http://blogs.wsj.com/economics/2008/02/29/banks-may-need-to-shrink-by-2-trillion-on-subprime-losses/?mod=homeblogmod_economicsblog

Read It Here First: You Walk Away.com

Friday, February 29, 2008 | 10:36 AM

in Financial Press | Real Estate | Web/Tech

One month ago today, our site-of-the-day was You Walk Away Dot Com.

Today, there is a front page NYTimes article about -- anyone? anyone? -- You Walk Away.com:

"Then in January he learned about a new company in San Diego called You Walk Away that does just what its name says. For $995, it helps people walk away from their homes, ceding them to the banks in foreclosure...

You Walk Away is a small sign of broad changes in the way many Americans look at housing. In an era in which new types of loans allowed many home buyers to move in with little or no down payment, and to cash out any equity by refinancing, the meaning of homeownership and foreclosure have changed, economists and housing experts say...

Though many states give banks recourse to sue borrowers for their losses, Mr. Case said, in practice it’s not often done “It’s tough to do recourse,” he said. “It’s costly, and the amount of people’s nonhousing wealth tends to be pretty slim...”

The company assured him that in California he was not liable for his debt, and provided sessions with a lawyer and an accountant, as well as enrollment with a credit repair agency. He stopped paying his mortgage and used the money to pay down other debts." (emphasis added)

Just doin' our job, keeping you informed a solid month ahead of the mass media.

Previously:

You Walk Away Dot Com.
http://bigpicture.typepad.com/comments/2008/01/site-of-the-day.html

Source:
Facing Default, Some Walk Out on New Homes
JOHN LELAND
NYT, February 29, 2008
http://www.nytimes.com/2008/02/29/us/29walks.html

S&P500 Earnings for 2007: Down -4.2%

Friday, February 29, 2008 | 05:30 AM

in Earnings | Valuation

At the beginning of 2007, the S&P500 was over 1,400, the Dow was just under 12,500, and the Nasdaq was about 2,500. Stocks, according to consensus estimates, were "cheap," and profit growth expected to be 10%+.

With 90% of earnings reported by the S&P500 firms, we now have enough data to see how the full calendar year was for profits.

Here's the overview from S&P's Sam Stovall:

At the end of 2006, S&P equity analysts expected operating earnings per share (EPS) for the S&P Composite 1500 (comprised of the S&P 500, MidCap 400 and SmallCap 600 indexes) to advance 10% in 2007, a healthy follow-up to the 15% gain seen in 2006.

Yet with 2007's results nearly final, we now find that EPS for the S&P 1500 actually sank by almost 4% on a worse-than-expected fallout from the housing, subprime, and credit crises.

Within the S&P 1500, the S&P 500 index, which represents 88.5% of the market value of the 1500, likely registered a 4.2% year-over-year decline, while the S&P MidCap 400 (7.8% of the 1500) eked out a 0.1% gain, and the S&P SmallCap 600 (3.7% of the 1500) fell 5.6%.

The 1500's negative earnings results for the year were the result of deteriorating profit growth for the Consumer Discretionary and Financials sectors in particular, as these sectors posted declines of 17.8% and 33.3%, respectively, as of Feb. 19, 2008. The second half of last year was the toughest for the overall market, as it suffered through EPS declines of 9% in the third quarter and 22% in the fourth, a quarter that many dubbed the "kitchen-sink quarter" as companies wrote down everything—including the proverbial fixture. (emphasis added)

The relative performance of the mid-caps was likely due to the presence of many energy, commodity and agricultural stocks. Indeed, a few sectors have done rather well: The exporting industrials, anything Ag or energy related, consumer staples, utilities have all thrived. Financials, anything house related, many retailers, consumer discretionary all performed poorly. I was a little surprised by the full year number, thinking the good sectors and the first half numbers might partially offset the second half.

What does this say about the market itself as a forecaster?

Short answer: The easy, glib readings -- so favored by all too many ignorant media pundits -- are all too often, wrong. Accurately interpreting the body language of Mr. Market is far more difficult and nuanced than the usual nonsense you hear peddled.

Here's the amusing part: The same group of S&P equity analysts who foolishly were looking for a 10% advance in 2007, are now expecting a profits recovery in the second half of 2008. Their favorite sectors are (drum roll) Consumer Discretionary and Financials.

The thinking must be that the credit crunch will just go away, energy and food prices will drop, and the consumer will begin another wanton spending spree.

Hmmmm. I suspect this S&P profit forecast to be every bit as prescient as the previous one . . .

Source:
Earnings: A Clearer Picture Emerges
Sam Stovall
February 26, 2008, 7:44PM EST
http://www.businessweek.com/investor/content/feb2008/pi20080226_304457.htm

UK House Price Crash

Friday, February 29, 2008 | 03:00 AM

in Digital Media | Real Estate

For our UK and European readers: Here's a cute flash based movie out of the UK by Chris Parker: Vocation Vocation Vocation

click for video

The author writes: "This movie is dedicated to Kirstie Allsop of Channel 4's "Location, Location, Location." I would love to get more color on this spat . . .

Sources:
Vocation Vocation Vocation
http://www.parkerchris.pwp.blueyonder.co.uk/vocationvocationvocation.html

House Price Crash UK
http://www.housepricecrash.co.uk/index.php

Kirstie Allsopp and the Tories
http://snowflake5.blogspot.com/2007/10/kirstie-allsopp-and-tories.html

Ridiculous Price: 7.2MP Digital Camera

Thursday, February 28, 2008 | 06:30 PM

in Digital Media | Web/Tech

Casio Exilim EX-Z75 7.2MP Digital Camera with 3x Anti Shake Optical Zoom

I have the pre-predecessor to this camera: The Casio EX-Z50. My camera is 5 megs (not 7), no video capture, no Anti-Shake DSP image stabilization, and cost about ~$300 three years ago. I have been very happy with it, so much so that I got the predecessor EX-70 for the missus for about $200 18 months ago.

This one is wicked cheap: $134 at Amazon (w/free shipping)

Even better deal: If you are in NYC, J&R had an ad in today's paper: $129!

Casio Exilim EX-Z75 7.2MP Digital Camera with 3x Anti Shake Optical Zoom

Go buy 3 or 4 and give them out to all your friends . . .

Does Google Lose Market Share as Web Advertising Grows?

Thursday, February 28, 2008 | 04:30 PM

in Web/Tech

Interesting analysis from online REPORTER:

"For the past few years, Google has lorded over online media and advertising, but according to recent data other media companies might have a fighting chance for more market share.

In its quarterly wrap-up report, researcher IDC says total US Internet ad spending in the fourth quarter of 2007 grew nearly 28% over the same quarter in 2006 to $7.3 billion. For the full year 2007, online ad revenue grew 27% year over year to $25.5 billion.

IDC research also found that Google's net US market share declined for the first time in two years due to slower growth in domestic fourth-quarter sales. The market leader's net US Internet advertising market share was down 0.5 percentage points to 23.7% last quarter compared to Q3 in 2007.

Google's estimated net US Internet advertising sales (excluding the traffic acquisition costs they pay out to the partners in their networks) grew by a little more than 40% in 4Q07, but its year-on-year growth rate in the quarter before had been 50%. It doesn't sound like much of a decline, but it might be good news for Microsoft and Yahoo if they merge.

Source:
THE online REPORTER
February 16-22,2008
http://www.onlinereporter.com/

Dollar Submerged

Thursday, February 28, 2008 | 02:00 PM

in Currency

Who Are These People Surprised by Economic Data?

Thursday, February 28, 2008 | 11:54 AM

in Economy | Financial Press

The WSJ on gross domestic product and initial jobless claims:

"Stocks fell Thursday after weaker-than-expected economic readings and earnings reports underscored the potential for a recession."

Weaker than expected? WTF?

I keep hearing people talk about this "negativity bubble" -- but from where I sit, the media, traders, analysts are still too optimistic -- perhaps way too optimistic.

We have had 4 rallies over the past few weeks of nearly 200 Dow points in a given day. That doesn't sound like excessive pessimism to me.

Ask yourself this: Is the greater fear getting stuck with stocks that move lower -- or missing any rally?

Its easy to make an argument that speculative fervor lives; that the steep yield curve has emboldened traders, and that the lower prices are attractive; and that most of the bad news is already priced in.

But consider the following headlines:

Eight Reasons There Won't Be a Recession

Blue chips are signaling recession can be avoided

Stocks in U.S. Tumble After GDP Trails Economists' Forecasts

Eisenbeis Says Concerns of U.S. Recession `Overblown'

U.S. Economy Grew 0.6% in Q4, Less Than Economists Estimated

Despite write-downs, it looks like the bottom is near for stocks

Bush: US is not headed into recession

Sears Net Sinks on Weak Sales

Do these reek of hope or of despair?

I am working on a column describing exactly what the bottom of a Bear market looks like. Sorry to tell you kids, but this ain't it.

Source:
Fourth-Quarter GDP Unrevised at 0.6%
JEFF BATER
WSJ, February 28, 2008 8:48 a.m.
http://online.wsj.com/article/SB120420491942899787.html

Why the Fed is Compelled to Lie to Congress

Thursday, February 28, 2008 | 07:32 AM

in Credit | Economy | Federal Reserve | Inflation

I had an interesting conversation yesterday about Ben Bernanke's testimony with a person upset over the obvious understatements, spin, and happy talk -- even as the Fed Chair quite soberly discussed the US slowdown.

If the Fed were to come clean about the present circumstances, it would cause a market panic. That's why we get this very gradual shift in assessments, all designed to be somewhat reassuring as it slowly feeds measured dollops of reality into the marketplace.

Yesterday's dovish congressional testimony from Bernanke (and in Vice Chair Don Kohn's speech the day prior) will be continued today. It is, as it has always been and always will be.

Why? Imagine if the Fed Chair told the unvarnished truth: The Dow would see a 1,000 point intra-day drop, and that won't help the Fed steer the ship.

Imagine if the Fed fessed up to what we know to be true, and what we suspect the future might bring:

Opening statement of the FOMC Chair, Senate Testimony
February 27, 2008:

Senators, we find ourselves in a very challenging situation.

Following the dot com implosion, my predecessor at the Fed slashed rates to a generational low of 1%; the FOMC then kept rates at 1% for over a year.

While that re-inflated the economy, it also set off a shock wave of inflation unseen since the 1970s. Houses doubled in price, Oil is up 5 fold, food stuffs have tripled, and the dollar has collapsed. Gold is at multi-decade highs.

As always happens, these price increases in hard assets attracted speculators, and that made the situation -- especially in housing -- much more complex. Even worse, the housing speculation contributed to a debacle, while these other assets are actually accelerating in price.

Further, as was the political fashion, deregulation and a lack of interest in the oversight role of the banking system allowed an unprecedented expansion of credit, including to the least credit worthy consumers. Additionally, derivative selling -- at is heart, an unregulated form of insurance -- expanded from a few billion dollars to $46 trillion dollars.

The credit crunch is unprecedented, far worse than the S&L collapse and Long Term Capital Management -- combined.

All of these factors have combined to create our present situation. Inflation remains very elevated and worse, quite sticky. Growth continues to slide towards zero -- and possibly beyond.

Like many others, our forecasts in these areas have been wrong. We expected the slowing economy to moderate inflation, and so far, that has not happened. Demand for commodities from China and India is keeping prices elevated. The weakening dollar -- now at levels last seen in the 1960s -- is forcing all dollar denominated commodities higher. I don't necessarily believe in "Peak Oil," but the fact that the Saudis are one of the world's biggest investors in alternative energy research might tell you something.

The last time a slowing economy failed to moderate prices was the 1970s. Even as the economy slid into recession, we had major spikes in the prices of energy, food, clothing.

What is particularly worrisome to me is that as we have slashed interest rates 225 basis points, consumer loans -- mortgages and revolving credit -- have actually moved higher.

Gentleman, this is a major problem. And our internal, non-public projections forecast it is only going to get worse for the next 4 quarters . . .

Now you understand why the Fed fibs. If they told the full and unvarnished truth, it would be beyond fugly.

Sources:
Semiannual Monetary Policy Report
to the Congress by Chairman Ben S. Bernanke
Before the Committee on Financial Services, U.S. House of Representatives
Federal Reserve, February 27, 2008
http://www.federalreserve.gov/newsevents/testimony/bernanke20080227a.htm

The U.S. Economy and Monetary Policy
Vice Chairman Donald L. Kohn at the University of North Carolina at Wilmington, Cameron School of Business' Business Week Program, Wilmington, North Carolina
Federal Reserve, February 26, 2008
http://www.federalreserve.gov/newsevents/speech/kohn20080226a.htm

Bloomberg Podcasts on ther Economy

Thursday, February 28, 2008 | 04:30 AM

in Digital Media | Economy | Financial Press

Some interesting podcasts with Tom Keene via Bloomberg on the Economy:

Shilling Sees Consumers Spend Less as Home Prices Fall Feb. 27 (Bloomberg) -- Gary Shilling, president of A. Gary Shilling & Co., spoke from Springfield, New Jersey, about a report today showing U.S. consumer confidence fell to the lowest level in five years, the outlook for spending and the economy.
Listen Now/ Download

Levy Says U.S. Inflation to Decline as Spending SlowsFeb. 26 (Bloomberg) -- Mickey Levy, chief economist at Bank of America, spoke in New York about the turmoil in credit markets, the U.S. economic outlook and Federal Reserve Governor Frederic Mishkin's speech at East Carolina University in Greenville, North Carolina.
Listen Now/ Download

Wieting Says Citigroup Sees About 1% U.S. Growth in 2008
Feb. 22 (Bloomberg) -- Steven Wieting, managing director of economic and market analysis at Citigroup Global Markets, spoke from New York about the U.S. financial markets and economy, the impact of inflation on economic performance and the outlook for U.S. corporate profits.
Listen Now/ Download

Susan Wachter Calls U.S. Housing Decline `Unprecedented'
Feb. 21 (Bloomberg) -- Susan Wachter, a professor at the University of Pennsylvania's Wharton School, spoke from Philadelphia about the U.S. subprime mortgage crisis and outlook for the housing market.
Listen Now/ Download

Gross of Pimco Sees `Developing Bargains' in Loan Market
Feb. 20 (Bloomberg) -- Bill Gross, managing director of Pacific Investment Management Co., talks about the U.S. bond and debt markets, Federal Reserve monetary policy and inflation and the outlook for the financial industry.
Listen Now/ Download

Grasher Says MBIA, Ambac Driven by Mortgage `Hysteria'
Feb. 20 (Bloomberg) -- Michael Grasher, an analyst at Piper Jaffray & Co., spoke from Chicago about the outlook for bond insurers including MBIA Inc. and Ambac Financial Group Inc., the potential for industry regulation and the impact of bond ratings on municipalities.
Listen Now/ Download

McKelvey Says Goldman Expects `Sluggish' U.S. Growth
Feb. 15 (Bloomberg) -- Ed McKelvey, senior U.S. economist at Goldman Sachs Group Inc., spoke from New York about the outlook for the U.S. economy through 2009, the country's trade and budget deficit and the impact of fiscal and monetary stimulus on growth.
Listen Now/ Download

Harris, Economist, Says Fed May Cut Funds Rate to 1%
Feb. 14 (Bloomberg) -- Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc., spoke yesterday about his forecast for U.S. growth, the performance of Federal Reserve Chairman Ben S. Bernanke and the outlook for monetary policy. Harris was ranked as the top forecaster in a Wall Street Journal survey for his analysis of the impact of the housing slump and the outlook for inflation.
Listen Now/ Download

Eisenbeis Says Concerns of U.S. Recession `Overblown'
Feb. 14 (Bloomberg) -- Robert Eisenbeis, former head of research at the Federal Reserve Bank of Atlanta and chief monetary economist at Cumberland Advisors Inc., spoke from Atlanta about economic forecasting, Federal Reserve monetary policy and the U.S. economy and financial industry.
Listen Now/ Download

Most of the stuff I get from the PR departments of media are pure shite, but this was one of the better pages . . .

Indexed

Wednesday, February 27, 2008 | 08:24 PM

in Books | Data Analysis

I have been totally loving this little book by Jessica Hagy called Indexed:

With a few deft lines, she manages to communicate a whole lot more information then you would imagine possible, in quite an amusing and witty way.

Some of her stuff comes dangerously close to chart porn.

I posted a few more examples after the jump.

Golden parachutes make for wild rides. Card1128

Payback
Card1272

Great stuff . . .

Continue reading "Indexed"

Housing Round Up

Wednesday, February 27, 2008 | 05:00 PM

in Financial Press | Real Estate

Given our prior post, here is quick round up of what's happening in the universe of Housing:

• New-Home Sales Sank in January To Slowest Pace Since 1995 (WSJ)
• New-home sales fall despite record price cuts (MarketWatch)
• Roubini: FHLB Lending “Reckless” (Real Time Economics)
• January foreclosures up 57% (CNN/Money.com)
• New Home Sales (Barron's)
• Cuomo Near Deal On Home Appraisals (Washington Post)
• Fannie Mae, Freddie Mac Portfolio Caps Will Be Lifted (Bloomberg)
• Ofheo Lifts Freddie, Fannie Limits; Fannie Posts Deep Quarterly Loss (WSJ)
• Mortgage applications slide again (AP)
• Home price plunge accelerates (CNN/Money.com)
• Toll Brothers Swings to Loss (AP)
• The ‘R’ Word (And Some Other Stuff) Hurting Home Sales (Real Time Economics)
• Nobody 'talked' housing into its recession (MarketWatch)
• Foreclosure bill faces Senate test (CNN/Money.com)
• Lehman begins coverage of home-builder stocks (MarketWatch)
• MBIA Gets Top Rating -- Should I Laugh or Cry? (Thestreet.com)

Source:
Manic markets, US home prices, consumer confidence, Michael Milken, the dollar
Jim Walker
Asianomics, Wednesday, 27 February 2008
http://www.asianom.com/members/authors/?authorID=2

Detroit Housing = ~$0

Wednesday, February 27, 2008 | 01:51 PM

in Economy | Real Estate | Web/Tech

Astounding:

People have tried to take me to task when I differentiate between stocks and houses. The half joking quote is "The difference between stocks and houses is, outside of Love Canal & Detroit, houses don't go to zero."

As you can see from the attached web page listings, that is only the slightest of exaggeration, as there are quite a few house in Detroit for sale at $100 each.

And, if you search for $0 - $5,000 price range in Detroit, MI, you will find 1,397 properties in that range, out of 20,881 properties for sale.

Why is "zero" only a sleight exaggeration? Renting an apartment (no property tax, no maintenance obligations, no heating costs) is cheaper in Detroit than owning a home -- even one that costs $100 . . .

>
click for more listings

Thanks, Pete!

Source:

Detroit, MI Property Listings
NATIONAL ASSOCIATION OF REALTORS
Realtor.com
http://www.realtor.com/search/searchresults.aspx?ctid=2959&ml=3&mxp=5&typ=7

Big Picture Demographic Survey

Wednesday, February 27, 2008 | 10:00 AM

in Weblogs

UPDATE: February 27, 2008 2:00 pm

The Survey is done -- thank you for all your assistance in doing this! I will get something up on this later this week.

~~~

As previously discussed, here is the marketing survey so favored by advertisers.

While this asks for a variety of personal details, it is a totally anonymous survey -- you do not provide a name, or an email address, or an IP address.

Have at it!

Dollar Weakness

Wednesday, February 27, 2008 | 09:00 AM

in Currency | Financial Press | Music

Here's another fun quote, via the NY Sun:
>

"The last time the dollar was this low, Jimi Hendrix was on tour," the director of equity research at Fusion IQ, Barry Ritholtz, said.

>
Now, I find this quite intriguing.

Why? Well, any interview I do with print media runs pretty much the same way. I give a short answer to the immediate question, than some background for context (usually random and long-winded babbling). I always slip something in that amuses me, which almost never gets used.

Until lately. These quips -- note the musical theme -- seem to be increasingly finding their way into print. And I wonder why. I do the same interview pretty much each time; Missus BP will assure you that I am no wittier than before.

Has the media simply tired of boring dry discussions? Is it a bit of recessionary gallows humor? Or perhaps the economic beat reporters are younger, of the generation who grew up in an era of sarcasm and ironic detachment and The Daily Show?

Regardless, I find it an intriguing change . . .

Previously:
Quote of the day: Stagflation & the 1970s
http://bigpicture.typepad.com/comments/2008/02/quote-of-the--6.html

Source:
Dollar Plunges as Bernanke Goes to Hill
JULIE SATOW
NY Sun, February 27, 20
http://www.nysun.com/article/71900

Jimi Hendrix Official Site
http://www.jimihendrix.com/index.php
Wikipedia entry

Declining Home Prices, Rising Mortgage Rates

Wednesday, February 27, 2008 | 06:23 AM

in Credit | Federal Reserve | Fixed Income/Interest Rates | Inflation | Real Estate

courtesy of WSJ

The Fed's effort to bail out the credit crisis and Housing crash has run into an odd problem: Despite cutting rates 225 basis points since September, mortgage rates have actually gone up:

"The Fed's efforts so far to soften the blow of the housing slump with lower interest rates appear to be having a muted effect. Since September, the Fed has reduced its target for short-term interest rates by 2.25 percentage points to 3%. But some mortgage rates are actually rising, and those that are falling haven't fallen that much.

The average interest rate on a standard 30-year fixed-rate mortgage was 6.38% yesterday, little changed from September but up from 5.61% in late January, according to HSH Associates, a mortgage-data publisher in Pompton Plains, N.J. Interest rates on so-called jumbo mortgages -- those larger than $417,000 -- were at 7.35%, also close to their September levels.

Rates on adjustable mortgages have come down, but not by as much as the Fed has cut the rates it influences. A three-year ARM, for instance, carried a 5.43% interest rate yesterday, down from 6.29% in mid-September. Still, lower short-term rates should help millions of homeowners who took out ARMs with low teaser rates that are set to jump higher.

There are two reasons mortgage rates haven't responded more to the Fed's rate cuts. One is that long-term Treasury yields, which are the benchmark for most mortgage rates, have risen recently, perhaps because of increased concern about inflation as the prices of oil and other commodities soar. The other is that the spread between mortgage rates and Treasury rates has widened as investors and banks become increasingly reluctant to make home loans."

We closed on our current home March 2007. 30 year, prime, conforming mortgage. Rate: 6.125%. And, we keep getting refi offers from Chase and Citibank -- for 6.25 - 6.50%. (No thanks!)

Well, the Fed may not have impacted the mortgage arena much, but at least (as forewarned), they have had a significant impact on prices: rampant inflation . . .

UPDATE: February 28, 2008 9:42am

Bank Rate notes:

Bankrate: Fixed Mortgage Rates at 4-Month High

With the Federal Reserve expected to cut interest rates again at their meeting in March, rates for things like adjustable rate mortgages that are tied to short- term benchmarks have been moving lower. But concerns about inflation and continued turmoil in credit markets has pushed long-term interest rates, and especially fixed mortgage rates, higher.

Previously:
Screaming Hot Producer Prices http://bigpicture.typepad.com/comments/2008/02/screaming-hot-p.html
>
Source:
Decline in Home Prices Accelerates
Fed's Efforts Have Only Muted Effect On Mortgage Rates
KELLY EVANS, SERENA NG and RUTH SIMON
WSJ, February 27, 2008; Page A1
http://online.wsj.com/article/SB120403496764693703.html

Roubini: Recession May Last Up to Six Quarters

Wednesday, February 27, 2008 | 04:00 AM

in Economy | Video

My pal Nouriel Roubini, of NYU and RGE talks with Bloomberg about the outlook for a U.S. recession and the housing market.

click for video

Source:
Roubini Says U.S. Recession May Last Up to Six Quarters
Video
Bloomberg, February 26 2008
http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vIborko58gg4.asf

Diebold Accidentally Leaks Results Of 2008 Election Early

Tuesday, February 26, 2008 | 05:33 PM

in Politics | Video

This is hysterical:

Diebold Accidentally Leaks Results Of 2008 Election Early

Online Ad Revs: $21B !

Tuesday, February 26, 2008 | 03:37 PM

in Web/Tech | Weblogs

I gotta get me some of this:

Online advertising revenues exceeded $21 billion for the first time in 2007, though preliminary data compiled by an industry trade group also suggest growth is slowing. The Interactive Advertising Bureau said its estimates show ad revenue grew 25% last year from nearly $17 billion in 2006. In dollar amounts, the estimated gain was $4.2 billion -- less than the 35% and $4.3 billion growth seen in 2006 from 2005. Analysts have said the growth rate was bound to slow as the Internet commands a larger share of the advertising pie, taking dollars away from traditional media like newspapers.

That's the last straw!

Expect to see a survey here tomorrow asking you for your age, income, social security number, ATM PIN #, and sexual orientation. Nothing too personal, just some demographic info . . .

Source:
Online Ad Revenues Topped $21 Billion in '07
Associated Press
WSJ, February 26, 2008; Page B4
http://online.wsj.com/article/SB120398677656992203.html

Screaming Hot Producer Prices

Tuesday, February 26, 2008 | 11:33 AM

in Commodities | Energy | Inflation

chart via brian jacobs

After too many months of inflation data telling anyone with a barely functioning cerebral cortex that significant price inflation was at hand, this month seems to have jarred the denialists into a very belated recognition of reality.

As the delightful chart porn above shows, the costs of materials for food, energy and finished goods is up significantly.

Bloomberg notes:

"Prices paid to U.S. producers rose more than twice as much as forecast in January, pushed up by higher fuel, food and drug costs, signaling inflation may keep accelerating even as growth slows.
The 1 percent increase followed a 0.3 percent drop in December, the Labor Department said in Washington. The median forecast in a Bloomberg News surv