Friday, January 15, 2010

Big Banks Accused of Short Sale Fraud - from CNBC's Diana Olick

Link to full article here.

Big Banks Accused of Short Sale Fraud

Posted By: Diana Olick | CNBC Real Estate Reporter
cnbc.com
| 15 Jan 2010 | 12:13 PM ET

Just as regulators, lawmakers and all forms of financial oversight boards are talking about new regulations to guard against mortgage fraud and another mortgage meltdown, there appears to be yet a new mortgage fraud out there today, allegedly perpetuated by agents of, yes, the big banks.

I was first alerted to this by Jeremy Brandt, the CEO of several companies that bring short sale agents, investors and sellers together.

His companies include 1800CashOffer, HomeFlux.com and FastHomeOffer.com. Brandt has a huge network of short sale real estate agents, and over the past several months he's been receiving all kinds of questions and complaints about trouble with second lien holders.

As we all know, during the housing boom, millions of Americans pulled cash out of their homes in the form of home equity loans and lines of credit. They also used "piggy back" loans in order to get even lower interest rates on their primary mortgages. Now, many of the borrowers in trouble, and many who are so far underwater on their loans that they don't qualify for any refi or modification, are choosing short sales as a way out. (Short sales are when the lender allows the home to be sold for less than the value of the loan). About 12 percent of all home sales by the end of 2009 were short sales, according to the National Association of Realtors.

In order for a short sale with two loans to happen, the second lien holder has to drop the lien.

If they don't, and there's no short sale, the home goes to foreclosure and the first lien holder gets the house because second liens are subordinated debt to the primary loan.

In short, the second lien holder gets nothing. In order to get the second lien holder to drop the lien, the first lien holder generally negotiates some partial payment to the second lien holder. The second lien holder doesn't have to agree, but more and more are doing so.

That's all legal.

But here's what's not legal and what's apparently happening quite often recently. Since many second lien holders are getting very little, they are now allegedly requesting money on the side from either real estate agents or the buyers in the short sale. When I say "on the side," I mean in cash, off the HUD settlement statements, so the first lien holder doesn't see it.

"They are pretty clear and pretty upfront about the fact that if the first lender knows they are getting paid, the first lender will kill the short sale," says Brandt. "So these second lenders are asking for the payments off the closing documents, off the HUD statement, usually in a cashiers check prior to closing. Once they receive that payment, they will allow the short sale to go through, which according to RESPA laws and the lawyers that we have spoken to on the topic is not legal."

(RESPA is the Real Estate Settlement Procedures Act, the 2008 law requiring that consumers receive disclosures at various times in the transaction. It outlaws kickbacks that increase the cost of settlement services. RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD. Read more about it here.).

I told RESPA specialist Brian Sullivan over at HUD about all this and he replied, "That's a red flag!"

Clearly illegal.

Brandt told me he's heard from at least 200 agents that they've had these requests made by representatives of Citi Mortgage , JP Morgan Chase , Bank of America and other large banks.

Most agents wouldn't go on the record with me, for fear of retribution by the banks with whom they have to work every day. But one agent, Kayte Gentry, of Keller Williams Integrity First Realty, was brave enough to blow the whistle.

"I think it's wrong, and I think somebody needs to hold them accountable, and every time I lose a house in foreclosure because of this, it hurts my client," says Gentry matter-of-factly. "Aside from being illegal and a violation of RESPA, it's immoral and truly it's just sad for the client that it's hurting."

Gentry says she has had the requests made three times and claims she lost one sale because of it.

"The big banks that have recently made this request, specifically payments outside of the closing statement have been Citi Mortgage and JP Morgan Chase."

JP Morgan Chase simply answered, "No Comment," when I relayed the charge to their media representative.

Bank of America denied the practice to CNBC in a written statement:
"Bank of America enforces a policy that all disbursements are documented on the settlement statement for short sales. When we are servicing a first mortgage with a second lien held by another investor, if the second lien holder asks for off-HUD payments, we will not approve the transaction (if we have knowledge of it). It is also against Bank of America’s policy to accept off-HUD payments on its second liens."

Citi 's reply was a bit more complicated:
“We work very hard to help distressed homeowners find solutions for their financial challenges. In our attempt to amicably resolve the debt, we will generally negotiate a reduced settlement with the homeowner in order to release a second lien. Unlike some lenders who refuse to reduce the payoffs on second liens, we choose to reduce the payoff amounts in some situations to assist the borrower. We do not provide instructions to settlement agents on how to fill out the settlement statement or any other closing documents, and we certainly do not require settlement agents or any other parties to violate applicable laws."

"When we confront the lenders and tell them that this request is illegal and a violation of RESPA, they tell us it's been cleared through legal and they don't care. Do it anyway," charges Gentry.

I personally heard a recording of a phone conversation between a short sale real estate agent and a second lien lender, during which the second lien lender clearly asked for cash outside of the settlement and threatened to kill the deal without it.

The real estate agent was rightly concerned and reluctant (the recording was given to me by Brandt who got it from the agent. The agent would provide no information on the lender, for fear of retribution):

AGENT: Well yes, I don’t want to lose my license, go to jail, I mean, I have to sign…

LENDER: You're not going to lose your license - we have plenty of realtors who do this, who actually understand how this whole process goes - and they realize that OK, if I want to get this done, this will take place."

I contacted the Treasury Department, HUD, FINCEN (Financial Crimes Enforcement Network) and the Federal Trade Commission, and none of their representatives could tell me of any active investigation into this. The folks at HUD said they'd be very interested to see my story.
# Read All My Stories on Realty Check
# Slideshow: Housing Markets Most Likely to Have Hit Bottom

Questions? Comments? RealtyCheck@cnbc.com
© 2010 CNBC, Inc. All Rights Reserved

Market wrap - 4:10 pm

The market for the first time in a long time, took good news as bad news. After the JP Morgan earnings release this morning, the market sank lower from the open. The sell of was pretty much across all sectors and industries. Only a late day rally took the indexes off the sessions lows gaining back some of the losses.










Floored - the movie

I just heard about this today. I can't wait to see it.  The trailer is below, and if you watch CNBC you will know a few of these guys.

Link to the movie homepage.

Alan Grayson Introduces Bills To Fight Corporate Money In Politics

From the Huffington Post

Alan Grayson Introduces Bills To Fight Corporate Money In Politics

Anticipating a Supreme Court decision that could free corporations to spend unlimited amounts of money on political campaigns, Rep. Alan Grayson (D-Fla.) introduced five bills on Wednesday to choke off the expected flood of corporate cash.

"We are facing a potential threat to our democracy," Grayson said in an interview with HuffPost. "Unlimited corporate spending on campaigns means the government is up for sale and that the law itself will be bought and sold. It would be political bribery on the largest scale imaginable."

At issue in the Supreme Court case is whether the government can limit corporate spending during presidential and congressional campaigns. The case is pitting Citizens United, a conservative group, against the Federal Election Commission. The FEC banned ads for Citizens United's film bashing Hillary Clinton during the 2008 election season.

Grayson introduced a handful of bills on Wednesday -- the Business Should Mind Its Own Business Act, the Corporate Propaganda Sunshine Act, the End Political Kickbacks Act, and two other measures.

The Business Should Mind Its Own Business Act would impose a 500 percent excise tax on corporate contributions to political committees and on corporate expenditures on political advocacy campaigns. The Corporate Propaganda Sunshine Act would require public companies to report what they spend to influence public opinion on any matter other than the promotion of their goods and services. The End Political Kickbacks Act would restrict political contributions by government contractors.

The other measures would apply antitrust regulations to political committees and bar corporations from securities exchanges unless the corporation is certified in compliance with election law.

"This case is basically about an effort to get around that. Citizens United took corporate money and tried to influence an election," said Lisa Gilbert of the U.S. Public Interest Research Group. "These are all pieces of good policy. I hope they draw attention to the potential frightening implications of Citizens United."

ABCNews reported on Wednesday that Democratic leadership is hard at work on a legislative response to the Supreme Court's expected ruling. Grayson told HuffPost that he had consulted with leadership before launching his preemptive strike.
Story continues below

Jeff Patch, a spokesman for the Center for Competitive Politics, an organization that advocates for lifting campaign finance restrictions, said Grayson's bills were too focused on corporate spending. "These are totally targeted at corporations, but Citizens United is widely believed to affect corporations and unions and nonprofits equally."

Grayson disagreed. "One year's profit for Exxon is greater than the entire political expenditure of all unions put together," he said.

Grayson added that he wanted to send the message that people are paying attention to the Supreme Court.

"This issue transcends the usual political arguments. I don't think the teabaggers would be very happy if our government was bought and paid for by a huge national corporation," he said.

The Supreme Court's ruling, which has been expected for months, could come as soon as Jan. 20.

Interesting CNBC interview on the California Pot legalization issue

Joe Saluzzi on Bloomberg - posted 12:09

Good interview with Joe - tells it like it is.

CNBC interview - Bank Bonuses


Starve the beast - From Karl Denninger's Market Ticker - posted 10:35

I highly urge you to visit the link below and see what Karl is doing. One of the best blogs on the net dealing with the financial world.  He is willing to spend his time, money, and resources in a effort to fix this mess we now find ourselves in.  Join the effort if you can. There are strength in numbers.  I have contacted Karl and pledged my help to do what I can.  I hope you do the same. This crap has gone on long enough.

WE THE PEOPLE (Have Had Enough)

Conumer Sentiment - released 9:55


Industrial Production - released 9:15 - posted 9:30

 Full report here

Industrial production increased 0.6 percent in December. The gain primarily resulted from an increase of 5.9 percent in electric and gas utilities due to unseasonably cold weather. Manufacturing production edged down 0.1 percent, while the output of mines rose 0.2 percent. The change in the overall index was revised up in October, but it was revised down in November; for the fourth quarter as a whole, total industrial production increased at an annual rate of 7.0 percent. At 100.3 percent of its 2002 average, output in December was 2.0 percent below its year-earlier level. Capacity utilization for total industry edged up to 72.0 percent in December, a rate 8.9 percentage points below its average for the period from 1972 to 2008.

NOTE: The DocStoc service will not allow me to upload the document, you'll have to use the link for all the information.

 

CPI - released 8:30 - posted 8:45


cpi_01_15_2010 -

Empire State Manufacturing Survey - 8:30 release - posted 8:40



The Empire State Manufacturing Survey indicates that conditions for New York manufacturers improved for the sixth consecutive month in January. The general business conditions index climbed 11 points, to 15.9. The new orders and shipments indexes posted similar increases, and the unfilled orders index rose above zero. Both the prices paid index and the prices received index rose significantly, with the latter moving above zero for the first time in more than a year. Employment indexes advanced into positive territory. Future indexes were highly optimistic; activity and employment were widely expected to improve over the next six months. Prices, however, were expected to continue to climb in the months ahead.

In a series of supplementary questions, manufacturers were asked about their capital spending plans (see Supplemental Reports tab). Looking ahead to the next six to twelve months, 44 percent of respondents indicated that they expected to increase capital spending relative to its level in the past six to twelve months, while just 12 percent anticipated a decline. When the same question had been asked in October 2007, 42 percent of respondents had anticipated increased capital spending, while just under 19 percent had expected reductions. The most commonly cited factor behind increased investment was a need to replace IT (information technology) equipment, followed closely by a need to replace other capital goods. The most widely cited factors behind steady or decreased capital investment were low capacity utilization and low expected sales growth.

Conditions Improve for a Sixth Consecutive Month
The general business conditions index rose 11 points, to 15.9—its sixth consecutive reading above zero. One-third of respondents reported that conditions had improved in January, while 17 percent reported that conditions had deteriorated. The new orders index shot up 18 points, to 20.5, and the shipments index rose 13 points, to 21.1. After falling to -21.1 in December, the unfilled orders index rose to 2.7 this month. The delivery time index also climbed above zero, to 6.7. The inventories index, at -17.3, remained well below zero, as it has for much of the past year.

Both Prices Paid and Prices Received Now Rising
Manufacturers reported rising prices in January. The pace of input price increases accelerated, with the prices paid index rising 12 points to 32.0, its highest level in more than a year. A third of respondents said that input prices had risen over the month. The prices received index rose above zero for the first time in more than a year, climbing from -9.2 to 2.7. Employment indexes moved into positive territory after dipping below zero last month. The index for number of employees rose to 4.0, while the average workweek index rose to 5.3.

Increased Activity Widely Expected in the Months Ahead
Future indexes indicated that conditions were widely expected to improve further in the months ahead. The future general business conditions index rose to 56.0, with 63 percent of respondents expecting conditions to improve over the next six months. The future new orders and shipments indexes advanced to similar levels, and the future unfilled orders index rose to 22.7, its highest level in several years. The future inventories index hovered just above zero, suggesting that inventory levels were expected to level off. Prices were expected to climb further”the future prices paid index rose 14 points to 54.7, and the future prices received index fell slightly, to 20.0. Future employment indexes were well above zero, an indication that employment levels were expected to rise. The capital expenditures index rose to 33.3, and the technology spending index was little changed at 13.3.

Note: Data have undergone an annual benchmark revision. All historical data have been revised using new seasonal factors.

Pre-market - 10th trading day of 2010 - 7:50 am

Futures down after JPM posted a better than expected earnings report. Not sure why, haven't had a chance to look into it, but the futures dipped after the release.



Today's economic calendar:
Consumer Price Index 8:30 AM ET
Empire State Mfg Survey 8:30 AM ET
Industrial Production 9:15 AM ET
Consumer Sentiment 9:55 AM ET

Today's earnings reports:
Before open:

CRI
Carter's, Inc.
Consumer Goods
Textile - Apparel Clothing
JPM
JPMorgan Chase & Co.
Financial
Money Center Banks

After close: NONE

Upgrades:

ALOG
Analogic Corporation
Technology
Scientific & Technical Instruments
DTSI
DTS Inc.
Consumer Goods
Electronic Equipment
BAX
Baxter International Inc.
Healthcare
Medical Instruments & Supplies
TSN
Tyson Foods Inc.
Consumer Goods
Meat Products
PRFT
Perficient Inc.
Technology
Business Software & Services
BWLD
Buffalo Wild Wings Inc.
Services
Restaurants
CMG
Chipotle Mexican Grill, Inc.
Services
Restaurants
PPG
PPG Industries Inc.
Conglomerates
Conglomerates
LEN
Lennar Corp.
Industrial Goods
Residential Construction
IBN
ICICI Bank Ltd.
Financial
Foreign Money Center Banks
SEH
Spartech Corp.
Consumer Goods
Rubber & Plastics

Downgrades:

AGU
Agrium Inc.
Basic Materials
Agricultural Chemicals
BDX
Becton, Dickinson and Company
Healthcare
Medical Instruments & Supplies
CREE
Cree Inc.
Technology
Semiconductor Equipment & Materials
CJR
Corus Entertainment Inc.
Services
Broadcasting - Radio
ACL
Alcon Inc.
Healthcare
Medical Instruments & Supplies
GRS
Gammon Gold, Inc.
Basic Materials
Gold
SSL
Sasol Ltd.
Basic Materials
Oil & Gas Refining & Marketing
TOL
Toll Brothers Inc.
Industrial Goods
Residential Construction


Link to JPM earnings 8K report

Thursday, January 14, 2010

Tim Geithner CNBC interview - for reference - posted 10:30 pm


Market wrap - 4:15 pm

Another interesting day in the market. The jobs report & the retail sales numbers were not as good as expected, the market once again ignored the data and went higher. The volume is not what you would like to see, but it doesn't matter, the direction is up, no question.

It appears Intel beat the estimates so expect another rocket shot up tomorrow.






Goldman exec says firm gained from trading against clients - Reuters - posted 5:00

Elizibeth Warren on CNBC this morning - posted 1:45 pm

Link to article on CNBC here
No Escape from TARP as Things Stand: Warren

Published: Thursday, 14 Jan 2010 | 8:12 AM ET
Text Size
By: Antonia Oprita
Associate Web Producer, CNBC.com

Even when the TARP program will be finished, it will not actually end, because the market has now gotten used to the idea that institutions that are too big to fail will always be bailed out, Elizabeth Warren, chair of the Congressional panel for overseeing the TARP, told CNBC Thursday.

"The whole market has adjusted to the notion that the big boys will be safe no matter what," Warren, who is also a professor of law at Harvard, told "Squawk Box."

Changing this will require changing the rules, either by breaking up the big banks, regulating or taxing them more, or forbidding them to engage in certain activities, she explained.

"You can make it smaller, you can make it more expensive to be a big financial institution. If you're getting this guarantee, why shouldn't you pay for it," Warren said.

The US Treasury will own billions of dollars worth of financial assets when the TARP program is over and has not set clear principles for disposing of them, the Congressional Oversight Panel's monthly report showed.

"If we lose less money under TARP than we had originally projected, that's two thumbs up and God bless… but the point is, at the end of the day, when the TARP is over, it's not really over," said Warren.

"The implicit guarantee is now huge and it destroys any other potential competitive activity. This is what we have to wind back out of."

© 2010 CNBC.com

30 year bond auction - released 1:00 pm


30_year_bond_01_14_2010 -

Natural Gas report - released 10:30 - posted 10:35


Full report here

Business Inventories - released 1:00 - posted 10:14


business_inventories_01_14_2010 -

Jobless claims - released 8:30 - posted 8:44 am

Full report here

EMPLOYMENT AND TRAINING ADMINISTRATION
USDL 10-07-NAT
Program Contact:
TRANSMISSION OF MATERIAL IN THIS
Scott Gibbons (202) 693-3008
RELEASE IS EMBARGOED UNTIL
Tony Sznoluch (202) 693-3176
8:30 A.M. (EST), THURSDAY
Media Contact :
January 14, 2010
(202) 693-4676

UNEMPLOYMENT INSURANCE WEEKLY CLAIMS REPORT
          SEASONALLY ADJUSTED DATA

In the week ending Jan. 9, the advance figure for seasonally adjusted initial claims was 444,000, an increase of 11,000 from the previous week's revised figure of 433,000. The 4-week moving average was 440,750, a decrease of 9,000 from the previous week's revised average of 449,750.
The advance seasonally adjusted insured unemployment rate was 3.5 percent for the week ending Jan. 2, a decrease of 0.1 percentage point from the prior week's unrevised rate of 3.6 percent.
The advance number for seasonally adjusted insured unemployment during the week ending Jan. 2 was 4,596,000, a decrease of 211,000 from the preceding week's revised level of 4,807,000. The 4-week moving average was 4,855,000, a decrease of 151,500 from the preceding week's revised average of 5,006,500.
The fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 5.448 million.  
UNADJUSTED DATA
The advance number of actual initial claims under state programs, unadjusted, totaled 801,086 in the week ending Jan. 9, an increase of 156,165 from the previous week. There were 956,791 initial claims in the comparable week in 2009.
The advance unadjusted insured unemployment rate was 4.6 percent during the week ending Jan. 2, an increase of 0.4 percentage point from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 5,988,940, an increase of 503,924 from the preceding week. A year earlier, the rate was 4.4 percent and the volume was 5,855,855.

Extended benefits were available in Alabama, Alaska, Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Virginia, Washington, West Virginia, and Wisconsin during the week ending Dec. 26.
Initial claims for UI benefits by former Federal civilian employees totaled 1,466 in the week ending Jan. 2, a decrease of 187 from the prior week. There were 1,454 initial claims by newly discharged veterans, an increase of 73 from the preceding week.
There were 25,959 former Federal civilian employees claiming UI benefits for the week ending Dec. 26, an increase of 193 from the previous week. Newly discharged veterans claiming benefits totaled 36,116, an increase of 1,742 from the prior week.
States reported 5,002,180 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending Dec. 26, a decrease of 141,279 from the prior week. There were 1,666,412 claimants in the comparable week in 2008. EUC weekly claims include first, second, third, and fourth tier activity.
The highest insured unemployment rates in the week ending Dec. 26 were in Alaska (7.4 percent), Oregon (6.6), Idaho (6.2), Wisconsin (6.2), Michigan (5.9), Montana (5.7), Nevada (5.7), North Carolina (5.6), Pennsylvania (5.5), and Washington (5.4).
The largest increases in initial claims for the week ending Jan. 2 were in New York (+22,810), North Carolina (+20,942), Georgia (+11,172), Wisconsin (+9,938), and Alabama (+5,748), while the largest decreases were in Illinois (-6,928), Florida (-6,523), Kansas (-3,701), Maryland (-2,309), and California (-2,284).


UNEMPLOYMENT INSURANCE DATA FOR REGULAR STATE PROGRAMS



Advance



Prior1
WEEK ENDING
Jan. 9
Jan. 2
Change
Dec. 26
Year

Initial Claims (SA)
444,000
433,000
+11,000
432,000
535,000
Initial Claims (NSA)
801,086
644,921
+156,165
556,517
956,791
4-Wk Moving Average (SA)
440,750
449,750
-9,000
460,250
523,750

Advance



Prior1
WEEK ENDING
Jan. 2
Dec. 26
Change
Dec. 19
Year

Ins. Unemployment (SA)
4,596,000
4,807,000
-211,000
4,979,000
4,487,000
Ins. Unemployment (NSA)
5,988,940
5,485,016
+503,924
5,088,864
5,855,855
4-Wk Moving Average (SA)
4,855,000
5,006,500
-151,500
5,100,500
4,454,250

Ins. Unemployment Rate (SA)2
3.5%
3.6%
-0.1
3.8%
3.4%
Ins. Unemployment Rate (NSA)2

4.6%
4.2%
+0.4
3.9%
4.4%


INITIAL CLAIMS FILED IN FEDERAL PROGRAMS (UNADJUSTED)






Prior1
WEEK ENDING
Jan. 2
Dec. 26
Change
Year

Federal Employees
1,466
1,653
-187
1,434
Newly Discharged Veterans
1,454
1,381
+73
1,543


PERSONS CLAIMING UI BENEFITS IN FEDERAL PROGRAMS (UNADJUSTED)






Prior1
WEEK ENDING
Dec. 26
Dec. 19
Change
Year

Federal Employees
25,959
25,766
+193
19,710
Newly Discharged Veterans
36,116
34,374
+1,742
25,937
Railroad Retirement Board
10,000
10,000
0
7,000
Extended Benefits
302,272
296,580
+5,692
1,640
EUC 20083
5,002,180
5,143,459
-141,279
1,666,412

FOOTNOTES
SA - Seasonally Adjusted Data
NSA - Not Seasonally Adjusted Data
1 - Prior year is comparable to most recent data.
2 - Most recent week used covered employment of 130,128,328 as denominator.
3 - EUC weekly claims include first, second, third, and fourth tier activity.

UNADJUSTED INITIAL CLAIMS FOR WEEK ENDED 01/02/2010

STATES WITH A DECREASE OF MORE THAN 1,000 

State
Change

State Supplied Comment
IL
-6,928

Fewer layoffs in the construction, trade, and manufacturing industries.
FL
-6,523

Fewer layoffs in the construction, trade, service, and manufacturing industries, and agriculture.
KS
-3,701

No comment.
MD
-2,309

No comment.
CA
-2,284

Fewer layoffs in the construction and service industries.
NV
-1,113

Decrease due to a shorter workweek.

STATES WITH AN INCREASE OF MORE THAN 1,000 

State
Change

State Supplied Comment
MA
+1,166

Layoffs in the transportation, warehousing, and manufacturing industries.
AR
+1,779

Layoffs in the trade, service, and manufacturing industries.
IA
+1,871

Layoffs in the manufacturing industry.
MN
+2,142

No comment.
MI
+2,166

No comment.
NJ
+2,477

Layoffs in the transportation, warehousing, trade, service, public administration, and manufacturing industries.
OR
+2,939

No comment.
OH
+3,032

Increase due to holiday shutdowns.
SC
+3,414

Layoffs in the textile industry.
TX
+3,474

Layoffs in the trade, service, transportation, and manufacturing industries.
CT
+3,895

No comment.
TN
+4,609

Layoffs in the service and manufacturing industries.
PA
+5,427

Layoffs in the transportation, primary metals, and industrial machinery industries.
AL
+5,748

Increase due to seasonal shutdowns , as well as layoffs in the apparel and service industries.
WI
+9,938

Layoffs in the construction, trade, service, transportation, warehousing, and manufacturing industries.
GA
+11,172

Layoffs in the construction, trade, service, and manufacturing industries.
NC
+20,942

Layoffs in the construction, transportation equipment, textile, furniture, rubber/plastics, and lumber/wood industries.
NY
+22,810

Layoffs in the construction, service, and transportation industries. Figures are based on a five day processing week.

Import - Export prices - released 8:30 am - posted 8:39 am


import_export_01_14_2010 -

Retail Sales - released 8:30 - posted 8:37


retail_sales_01_14_2010 -

Pre-market - 9th trading day of 2010 - 8:00 am

Futures flat waiting on the jobless claims data out at 8:30



Today's economic calender:
ECB Announcement                                  7:45 AM ET - Rates unchanged
Retail Sales                                               8:30 AM ET
Jobless Claims                                           8:30 AM ET
Import and Export Prices                           8:30 AM ET
RBC CASH Index                                    9:00 AM ET
Business Inventories                                10:00 AM ET
EIA Natural Gas Report                          10:30 AM ET
3-Month Bill Announcement                    11:00 AM ET
6-Month Bill Announcement                    11:00 AM ET
30-Yr Bond Auction                                  1:00 PM ET
Money Supply                                           4:30 PM ET

Today's earnings reports.
Before open:

BGG
Briggs & Stratton Corp.
Industrial Goods
Diversified Machinery
CRAI
CRA International Inc.
Services
Management Services
QDEL
Quidel Corp.
Healthcare
Diagnostic Substances
SCHW
Charles Schwab Corp.
Financial
Investment Brokerage - National
SEED
Origin Agritech Limited
Consumer Goods
Farm Products
SJR
Shaw Communications, Inc.
Services
CATV Systems

After close:

COOL
Majesco Entertainment Co.
Technology
Multimedia & Graphics Software
INTC
Intel Corporation
Technology
Semiconductor - Broad Line
OZRK
Bank of the Ozarks, Inc.
Financial
Regional - Southeast Banks
PEDH
Peoples Educational Holdings, Inc.
Services
Publishing - Books
SHFL
Shuffle Master Inc.
Industrial Goods
Diversified Machinery

Upgrades:

RNIN
Wireless Ronin Technologies Inc.
Technology
Business Software & Services
SSS
Sovran Self Storage Inc.
Financial
REIT - Industrial
WRI
Weingarten Realty Investors
Financial
REIT - Retail
WRE
Washington Real Estate Investment Trust
Financial
REIT - Retail
PSA
Public Storage
Financial
REIT - Industrial
SKT
Tanger Factory Outlet Centers Inc.
Financial
REIT - Retail
CF
CF Industries Holdings, Inc.
Basic Materials
Agricultural Chemicals
CSE
CapitalSource Inc.
Financial
Credit Services
BIDU
Baidu, Inc.
Technology
Internet Information Providers
MRK
Merck & Co. Inc.
Healthcare
Drug Manufacturers - Major
NTAP
NetApp, Inc.
Technology
Data Storage Devices
UPS
United Parcel Service, Inc.
Services
Air Delivery & Freight Services
AAWW
Atlas Air Worldwide Holdings Inc.
Services
Air Services, Other
HMA
Health Management Associates Inc.
Healthcare
Hospitals
WBSN
Websense, Inc.
Technology
Internet Software & Services
SYMC
Symantec Corporation
Technology
Security Software & Services
SE
Spectra Energy Corp.
Basic Materials
Oil & Gas Pipelines
LMIA
LMI Aerospace Inc.
Industrial Goods
Aerospace/Defense Products & Services
JOYG
Joy Global, Inc.
Industrial Goods
Farm & Construction Machinery
TGI
Triumph Group Inc.
Industrial Goods
Aerospace/Defense Products & Services
AZN
AstraZeneca plc
Healthcare
Drug Manufacturers - Major
BKD
Brookdale Senior Living Inc.
Healthcare
Long-Term Care Facilities
RJF
Raymond James Financial Inc.
Financial
Investment Brokerage - Regional
RTP
Rio Tinto plc
Basic Materials
Steel & Iron
BHP
BHP Billiton Ltd.
Basic Materials
Industrial Metals & Minerals
INFY
Infosys Technologies Ltd.
Technology
Technical & System Software
PCS
MetroPCS Communications Inc.
Technology
Wireless Communications
WERN
Werner Enterprises Inc.
Services
Trucking
SOA
Solutia Inc.
Basic Materials
Specialty Chemicals
WYN
Wyndham Worldwide Corporation
Services
Lodging

Downgrades:

F
Ford Motor Co.
Consumer Goods
Auto Manufacturers - Major
HNI
HNI Corp.
Consumer Goods
Business Equipment
ECOL
American Ecology Corp.
Industrial Goods
Waste Management
COF
Capital One Financial Corp.
Financial
Credit Services
ZEUS
Olympic Steel Inc.
Basic Materials
Steel & Iron
SRE
Sempra Energy
Utilities
Gas Utilities
VSAT
ViaSat Inc.
Technology
Communication Equipment
AWC
Alumina Ltd.
Basic Materials
Synthetics
GSK
GlaxoSmithKline plc
Healthcare
Drug Manufacturers - Major
TGP
Teekay LNG Partners LP.
Services
Shipping
AFFX
Affymetrix Inc.
Technology
Scientific & Technical Instruments
FEIC
FEI Co.
Technology
Scientific & Technical Instruments
KMT
Kennametal Inc.
Industrial Goods
Machine Tools & Accessories

Wednesday, January 13, 2010

US must cut spending to save AAA rating, warns Fitch - 7:25 pm

Rah Ro!  From the Telegraph.co.uk

US must cut spending to save AAA rating, warns Fitch

Fitch Ratings has issued the starkest warning to date that the US will lose its AAA credit rating unless acts to bring the budget deficit under control, citing a spiral in debt service costs and dependence on foreign lenders.

Brian Coulton, the agency's head of sovereign ratings, said the US is shielded for now by its pivotal role in global finance and the dollar's status as the key reserve currency, but the picture is deteriorating fast enough to ring alarm bells.

"Difficult decisions will have to be made regarding spending and tax to underpin market confidence in the long-run sustainability of public finances. In the absence of measures to reduce the budget deficit over the next three to five years, government indebtedness will approach levels by the latter half of the decade that will bring pressure to bear on the US's 'AAA' status", he said.

Fitch expects the combined state and federal debt to reach 94pc of GDP next year, up from 57pc at the end of 2007. Federal interest costs will reach 13pc of revenues, meaning that an eighth of all taxes will go to service debt. Most fiscal experts view this level as dangerously close to the point of no return for debt dynamics.

The rating alert is a reminder that fiscal stimulus and bank rescues across the world have merely shifted private debt on to public shoulders. The bail-outs looked deceptively 'costless' at the time, but the damage to sovereign states may take years to repair. The US Treasury says interest payments as a share of GDP will rise to 3.6pc by 2016, the highest since data began in 1940 – when it was 0.8pc.

Mr Coulton said the US is vulnerable to "potential interest rate shocks" due to its reliance on short-term debt and foreign investors. The average maturity of US government debt has fallen to four years, compared to seven for Europe's AAA club, and 10 for Britain. "The share of three-month bills has risen very sharply as a result of recapitalising banks," he said.

This raises the danger of a roll-over crisis. Chinese, Japanese, and Mid-East investors own almost half of the stock of US debt. They are more likely to liquidate holdings than domestic investors, if there were a loss of confidence in Washington or the Federal Reserve. Short maturities mean that any jump in interest rates will be felt quickly.

Stephen Lewis, of Monument Securities, said a US downgrade would rip the anchor from the global system and pose a grave risk to the stability. "This would set off tremors, making all dollar assets less secure. You could argue that the reason why the rating agencies have not already downgraded the US and Britain is that they fear the consequences for the global economy if they pull the trigger," he said.

While US debt was higher after World War Two, circumstances were very different. The age structure was healthier. Most bonds were held by Americans. Demobilisation of the troops allowed for drastic budget cuts. America had emerged as the world's strategic and economic Colossus. This time the US cannot rely on exuberant growth to whittle down the debt.

Related: America slides deeper into depression as Wall Street revels - Telegraph

Market wrap - 4:10

The market gapped up a little this morning only to climb higher in the first minutes of trade, touching the 1140 area. It then turned downward to the 1133 area, a 7 point drop. This all took place in the first hour of the trading session.

The bankers were facing a Panel investigating the banking crisis. I watched for a while but it was apparent, even with some "decent" questions by the committee, this was window dressing, a farce, and a total waste of time. I didn't bother to watch the afternoon session, the bankers were gone, probably back to Fraud Street to count their billions of bonus money. Ho friken hum!

About 10:30 the market turned higher and ignored any bad news from the crude reports, bond auction, Beige book, or the Fed Monthly Statement. All is good apparently, and the market soured for the rest of the day, closing at 1146. A slight selloff right at the end taking it from the 1148 high of the day at 3:34 but still a 9.46 move, or 13 point move low to close. We now stand at the highs of 2010 and have traded to the upside 18 out of the last 23 days. It seems nothing, and I mean nothing, will take this market down.












Treasury Budget - 2:00 - posted 2:25 pm


Treaury_budget_01_13_2010 -

Beige Book - 2:00 - posted 2:15


BeigeBook_01_13_2010 -

10 year note auction - 1:00 - posted 2:10 pm


10_year_01_13_2010 -

Crude oil reports - released 10:30 - posted 2:05

Oil futures down for 3rd straight session on rising supplies - from MarketWatch

Crude slides 2% to under $79 a barrel after EIA report

NEW YORK (MarketWatch) -- Crude-oil futures slumped for a third consecutive session on Wednesday, with losses accelerating after the Energy Information Administration reported bigger-than-expected increases in U.S. supplies of crude and distillates.

Analysts expected cold temperatures to boost energy demand and reduce inventories. But drawdowns in heating-oil supplies were largely offset by a sharp increase in crude imports, according to Platts.

Imports of crude oil "surged as cargoes held out at sea due to end-of-year tax considerations were offloaded," said Platts senior oil analyst Linda Rafield in emailed comments.

Crude oil for February delivery was recently down 80 cents, or 1%, at $79.98 a barrel at the New York Mercantile Exchange. The contract earlier slumped more than 2% to hit an intraday low of $78.30 a barrel in electronic trade.
China Won't Always Pick Up The Pieces

Beijing is increasing the amount of capital banks need to keep on hand rather than lend. This effort to slow China's economy is an early marker suggesting the nation won't be able to bale out stock market sentiment as regularly as it did in 2009.

The latest move lower came after the EIA said crude-oil supplies rose by 3.7 million barrels in the week ended Jan. 8. Analysts polled by Dow Jones expected inventories to rise by 1 million barrels, while those surveyed by Platts expected a 1.9-million-barrel increase.

U.S. distillate inventories were up 1.4 million barrels. Analysts polled by Platts expected a drawdown of 1.7 million barrels.

The results showed even bigger increases in supplies than estimated by the American Petroleum Institute, an industry research group.

"These numbers prove in an impressive fashion that there is no supply shortage of oil and oil products in the U.S. and that the cold weather is a mere pretext for the latest price rally," said analysts at Commerzbank AG in a note to clients.

Heating oil for February delivery was down 4 cents, or 1.7%, at $2.10 a gallon.

Natural gas for the same month rose 14 cents, or 2.6%, to $5.74 per million British thermal units. The EIA will report on weekly natural-gas supplies on Thursday. Analysts polled by Platts expect a drawdown of 253 billion to 258 billion cubic feet from U.S. supplies.

Oil futures fell 2% on Tuesday on the New York Mercantile Exchange, hit by forecasts of milder temperatures and moves by China to stem its economic expansion.

The People's Bank of China lifted the reserve requirements for banks by 0.5 percentage point and lifted its interbank rate for the second time in a week. These moves are seen as a sign that the Chinese authorities may be trying to cool the country's rapid economic growth.

Oil and other commodity prices have been rising partly on optimism that China's thirst for natural resources will continue unabated as its economy expands. As a result, attempts to slow down Chinese growth tend to weigh on commodity prices.

Oil prices had also declined on Monday, pulling back from 15-month highs.

Financial hearings - links - 9:41

Using real player hearings can be heard here.
From the FDIC website here.

Related articles:
Panel Investigating Financial Crisis to Question Bankers - WSJ
For Bankers, Hearing Requires Walking a Fine Line - NYT

Pre-market - 8th trading day of 2010 - 7:55 am

Futures slightly up this morning. The dollar got whacked overnight, the 4th day in a row it is down.


Today's economic calendar:
MBA Purchase Applications          7:00 AM ET
EIA Petroleum Status Report       10:30 AM ET
10-Yr Note Auction                       1:00 PM ET
Beige Book                                   2:00 PM ET
Treasury Budget                            2:00 PM ET

Today's earnings reports.
Before open:
NWPX
Northwest Pipe Co.
Basic Materials
Steel & Iron

After close:

CLC
CLARCOR Inc.
Consumer Goods
Auto Parts
OHB
Orleans Homebuilders Inc.
Industrial Goods
Residential Construction
ZZ
Sealy Corp.
Consumer Goods
Home Furnishings & Fixtures

Upgrades:

BA
Boeing Co.
Industrial Goods
Aerospace/Defense - Major Diversified
GA
Giant Interactive Group, Inc.
Services
Business Services
RDWR
Radware Ltd.
Technology
Information Technology Services
QLGC
QLogic Corp.
Technology
Semiconductor - Integrated Circuits
XRTX
Xyratex Ltd.
Technology
Data Storage Devices
FRO
Frontline Ltd.
Services
Shipping
ORLY
O'Reilly Automotive Inc.
Services
Auto Parts Stores
SPPI
Spectrum Pharmaceuticals, Inc.
Healthcare
Drug Manufacturers - Major
CRUS
Cirrus Logic Inc.
Technology
Semiconductor - Specialized
AMAG
AMAG Pharmaceuticals, Inc.
Healthcare
Diagnostic Substances
UA
Under Armour, Inc.
Consumer Goods
Textile - Apparel Clothing
DPZ
Domino's Pizza, Inc.
Services
Restaurants
PRU
Prudential Financial, Inc.
Financial
Life Insurance
AFL
AFLAC Inc.
Financial
Accident & Health Insurance
HSTX
Harris Stratex Networks, Inc.
Technology
Communication Equipment
BWS
Brown Shoe Co. Inc.
Consumer Goods
Textile - Apparel Footwear & Accessories
FE
FirstEnergy Corp.
Utilities
Electric Utilities
ETR
Entergy Corporation
Utilities
Electric Utilities
FMX
Fomento Económico Mexicano, S.A.B de C.V
Consumer Goods
Beverages - Brewers
MSTR
MicroStrategy Inc.
Technology
Business Software & Services
WGOV
Woodward Governor Co.
Industrial Goods
Industrial Electrical Equipment
MDRX
Allscripts-Misys Healthcare Solutions, Inc.
Technology
Healthcare Information Services
ELX
Emulex Corp.
Technology
Computer Peripherals

Downgrades:

TIF
Tiffany & Co.
Services
Jewelry Stores
CAM
Cameron International Corporation
Basic Materials
Oil & Gas Equipment & Services
OII
Oceaneering International, Inc.
Basic Materials
Oil & Gas Equipment & Services
RLI
RLI Corp.
Financial
Property & Casualty Insurance
ITW
Illinois Tool Works Inc.
Industrial Goods
Diversified Machinery
LL
Lumber Liquidators Holdings, Inc.
Services
Home Improvement Stores
AAP
Advance Auto Parts Inc.
Services
Auto Parts Stores
AA
Alcoa, Inc.
Basic Materials
Aluminum
HGG
hhgregg, Inc.
Services
Electronics Stores
RGS
Regis Corp.
Services
Personal Services
LTM
Life Time Fitness Inc.
Services
Sporting Activities
CHS
Chico's FAS Inc.
Services
Apparel Stores
LEAP
Leap Wireless International Inc.
Technology
Wireless Communications
NWY
New York & Company Inc.
Services
Apparel Stores
RGA
Reinsurance Group of America Inc.
Financial
Life Insurance
AEZ
American Oil & Gas Inc.
Basic Materials
Independent Oil & Gas
PEG
Public Service Enterprise Group Inc.
Utilities
Diversified Utilities
MYGN
Myriad Genetics Inc.
Healthcare
Diagnostic Substances
CRXL
Crucell NV
Healthcare
Biotechnology

Bring Back Glass-Steagall - Banks that behave like hedge funds don't deserve guarantees. - WSJ