To be fair, Bloomberg’s Will Edwards managed to bury the happy-talk of the first story down in the body of the second, but we ended up with a couple of pretty clashing narratives coming out of Bank of America on Wednesday [1] and Friday.[2]
Full marks to cynicalgirl at Friday’s Ben’s Bits for picking up the wildly opposing spins. Should Housing Wire ever decide to run a "best dig" contest, this deserves a nomination. Below you’ll find a snapshot of the Bits thread as it looked shortly before 6AM.
Tip of the iceburg.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aKltYe1AuvX0
2007-06-22 05:18:10
Why does the name Titanic come to mind?
2007-06-22 05:25:10
This is interesting.
“Losses in the U.S. mortgage market may be the “tip of the iceberg,’’ Bank of America Corp. analysts said today in a note for clients.”
A bit of a contradiction from BOA just yesterday…
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aN64WudO99kM
“The worst U.S. housing slump in 16 years will begin to ease in the next month or two, and job growth will lift home prices and spur construction early next year, Bank of America Corp. Chief Executive Officer Kenneth Lewis said.”
cynical:
look at the difference in their AUDIENCE.
audience #1: their paid clients. They give them a little truth since the investors will only keep paying if they can invest using this advice.
audience #2: the sheople. They lie to get them to take out a mortgage, and to have faith in BofA stock price.
Exactly. They have a legal duty to audience no. 1
Great Catch CG. It’s great to have “experts” on the case.
OK, Doomers, we know you can do as well. Bears, bonds, IPO bonanzas, we want to hear it all. Just feed Igor his spam word, and give us your best shot.
________________________
Notes and References
[1]: "Bank of America’s Lewis Says U.S. Housing Slump Is Almost Over", by Will Edwards, Bloomberg, June 20, 2007.
The worst U.S. housing slump in 16 years will begin to ease in the next month or two, and job growth will lift home prices and spur construction early next year, Bank of America Corp. Chief Executive Officer Kenneth Lewis said.
“The drag stops in the next few months,” Lewis said in an interview yesterday in New York. “It’s just about to be over. We’re seeing the worst of it.”
[2]: "Bank of America Report Sees Worse Mortgage Defaults", by Sebastian Boyd and Will Edwards, Bloomberg, June 22, 2007.
Losses in the U.S. mortgage market may be the “tip of the iceberg” as borrowers fail to keep up with rising payments on billions worth of adjustable-rate loans in coming months, Bank of America Corp. analysts said.
Homeowners with about $515 billion on adjustable-rate home loans will pay more this year, and another $680 billion worth of mortgages will reset next year, analysts led by Robert Lacoursiere wrote in a research note today. More than 70 percent of the total was granted to subprime borrowers, people with the riskiest credit records, they said.
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Good morning from Germany
Fleck has an excellent piece out this week
Wall Street bets its chips on fantasy / Wall Street alchemists
http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/WallStreetBetsItsChipsOnFantasy.aspx
Bear Stearns’s `Friends’ Reject Hedge Fund Rescue in LTCM Redux
http://www.bloomberg.com/apps/news?pid=20601087&sid=aYDTeHYnV3ms&refer=home
Jan-Martin (comment #2) -
Looks like it’s going to be a long week. And this is just the start.
The “d” word is making headlines…..
BIS warns credit spree could produce 1930s-style depression
http://www.marketwatch.com/news/story/bis-warns-credit-spree-could/story.aspx?guid=%7BCEDD1FDC%2D721B%2D4441%2D86A3%2DC843C1923B8C%7D
If this credit crunch dose not produce a recession to Depression soon, It will be caused by another reason. The world is running out of oil. This shortage of oil is the cause of the rising price of gasoline over the last few years.
AS FOR THE HOUSING MARKETS, this will effect the housing in the suburbs first, as it will cause a large increase in the automobile commuting fuel cost. So far, gasoline is still too cheap to effect the land values in the suburbs. It will still be a couple years before the suburb home values are effected by rising gasoline prices. It will cause the suburb home values to drop faster then city homes.
This following link is to one of the best movies made very recently in Ireland which gives a very good explanation of the developing crises. It applies to North America just as much as Ireland.
The entire movie is on the internet at this address.
Using full screen mode for the movie is helpful.
http://www.rte.ie/tv/futureshock/av_20070618.html
This site has a brief written introduction and the link to the movie.
http://www.rte.ie/tv/futureshock/endoftheoilage.html
.
I would be glad to answer any questions that you have on this subjet. DocScience@hotmail.com
DocScience -
Have figured California’s Inland Empire was pretty much doomed long before I watched “The End of Suburbia”. I’m looking forward to viewing the video you cite, but really has there been much written lately that wasn’t foreshadowed in “Energy and Equity”, by Ivan Illich (1973)?
“Energy and Equity”, by Ivan Illich (1973)?
http://www.cogsci.ed.ac.uk/~ira/illich/texts/energy_and_equity/energy_and_equity.html
Title – “The energy crisis”
I found this article you mention very interesting.
To me it appears that our North American society is already at this point.
“the present escalation of capital-intensive institutional growth, and carry us past the last turnoff from a hyper-industrial Armageddon.”
This is such a good article, you should have sent me this link, a year ago.
>>The world is running out of oil. This >>shortage of oil is the cause of the rising >>price of gasoline over the last few years.
I’ve heard “we’re running out of oil” many times, and nobody has proven it yet. Indeed there is still a lot left in known reserves.
About that rising price of gasoline – never underestimate the hand that political maneauvering and grandstanding (Iraq, Iran, Saudi Arabia, Chavez, etc) is playing and has played in rising oil prices.
Oh, dear me! Did you say that the invasion of Iraq by BushCo made oil prices go up? Tsk. Tsk. Poor BushCo’s oil stocks are even *higher*. Poor little rich boys!
More recently, as prices have been climbing during the first half of this year it amazes me how conveniently, or so it seems, every other week some oil processing plant or other has had to shut down for retooling or repairs or had some other really good reason to tell the the world that they are stopping production for a days and…. oh? What’s that? The selfsame’s industry’s stocks have thus been climbing, and their petroleum products have thus had really good excuses (every second week) to raise prices yet again.
Don’t get me wrong, I don’t think this is some organized “conspiracy” – not at all. What it *IS*, however, is a bunch of big-money oil men who have independantly realized how to play the game, and justifiably keep raise prices.
To finish my thoughts on oil (I know, I know, this is a real estate blog!)….
What other industry do you know of where the head honchos can hold a press conference about how they royally screwed up and will have to shut down a plant for a few weeks…. and then sit back and watch their industry-wide stocks rise?
Send me an email – DocScience@hotmail.com
Ain’t No Yield High Enough Schiff
http://www.europac.net/externalframeset.asp?from=home&id=8968
Don’t hold breath for property supply drop
http://www.chinadaily.com.cn/bizchina/2007-06/26/content_902252.htm
S&P/Case-Shiller Home Prices Fell 2.1% in April, Index Shows
http://www.bloomberg.com/apps/news?pid=20601087&sid=aDPbZ0uuxP6E&refer=home
Five Things You Need to Know: New Home Sales; Lennar; Case-Shiller Index; Subprime Mortgage Problems Isolated to Just Seven States; Respected Bond Guru Reveals Disconcerting Level of Knowledge About Prostitution
http://www.minyanville.com/articles/New+Home+Sales-Lennar-Case+Schiller-Freddie+Mac/index/a/13208
The Housing Mirage
http://www.businessweek.com/bwdaily/dnflash/content/jun2007/db20070626_408546.htm?chan=top+news_top+news+index_top+story
Northern Rock’s 2007 Profit to Miss Analyst Estimates
http://www.bloomberg.com/apps/news?pid=20601087&sid=aThI6TPwiy0A&refer=home
When CDOs Trump Paris Hilton, There’s a Problem: Caroline Baum
http://www.bloomberg.com/apps/news?pid=20601039&sid=aUnp.hEzlt.8&refer=home
Jan-Martin (comment #17) -
wow
Jan-Martin -
Guitar Center? $2 billion??
Hi John,
yup. Lets wait until they have priced their bonds to fund this buy……
I´ve heard of few problmes there lately…
Five Things You Need to Know: Durable Goods Orders; “Cone of Silence”; What Is Mark-to-Model?; Usage of “Well Contained” Spilling Over Into Other Areas; CIA Releases Secret Documents Revealing Broad Agency Abuse of Sharpie® Pen Powers
http://www.minyanville.com/articles/Subprime-Merrill-Mar-To-Model-Bear+Stearns-Durable+Goods/index/a/13219
Cambridge Place’s Caliber Fund Shuts on Subprime Loss
http://www.bloomberg.com/apps/news?pid=20601087&sid=a9m4T7FOAwio&refer=home
Jan-Martin (comment #21) -
Buried in Depew’s Need2Know 3 – What is Mark-to-Model? is this zinger — “The credit ratings agencies’ ratings are key in the mark-to-model values, and so far very few CDOs have been re-rated in a way that reflects the surging subprime default rates.”
Carlyle Postpones $415 Million IPO of Mortgage Fund
http://www.bloomberg.com/apps/news?pid=20601087&sid=a2SjbpU_ZQJY&refer=home
postponed is quite an understatement…
Jan-Martin (comment #24) -
I caught this link over at Ben’s, too. This looks very significant — almost a clone of Bear’s Everquest IPO also being canceled. Does this mean the window to dump toxic waste this way onto retail stock investors has been largely shut off?
“Carlyle Postpones $415 Million IPO of Mortgage Fund”, by Edward Evans, Bloomberg, June 28, 2007.
Yup!
More homebuilder news…..
KB Home Reports Second-Quarter Loss as Revenue Falls in Slump
http://www.bloomberg.com/apps/news?pid=20601087&sid=aR09wtTloV6M&refer=home