The Crack of Doom – Week of July 30, 2007

Tom Peters said, "If you’re not confused, you’re not paying attention." If he hadn’t already thought of that one, somebody commenting on the markets last week could have had a first. Still, we’re heading into August, when the Wall Street A-team heads for the beach and the hills, come what may. This morning’s calm could well be the calm before the calm.

Whether the markets are only repricing risk, or repricing real assets, let us know what’s what. Just fire your finds into the Reply box from your laptop by the pool, and then get back to something important — like a good mystery novel and a cool drink :)

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21 Comments for this entry

  1. wcvarones says:

    Updated story of a San Francisco MBA student who thinks it’s a good idea to pay $714,000 for a 1-bedroom condo:

    http://wcvarones.blogspot.com/2007/07/poor-reflection-on-usf-mba-program.html

  2. John M. says:

    This story encapsulates the new “nothing real is going on, guys” mantra very nicely (and hits some other themes, AHM & the curious lack of customary big Monday M&A announcements).

    “Stocks flat, but volatility running high”, by Jennifer Coogan, Reuters (UK), July 30, 2007.

    “We have certainly disturbed investor psychology with talk of problems in the subprime market and the inability to finance takeovers,” said Al Kugel, chief investment strategist at Atlantic Trust in Chicago. “I don’t think it will affect the general economy, but it’s giving people pause when it comes to buying stocks.”

  3. metroplexual says:

    Nothing makes sense to me anymore. Dotcom blowup did but everything else since has been unreal. I think a reality check is long overdue, it is just that when the people deny reality for so long, the downside has a way of getting amplified. I am not looking forward to the emperor’s clothes ending coming soon.

  4. John M. says:

    Metro -

    Citadel seems to be trying to save Sowood today. That might expose at least some of the truth (among other things we’re talking about some of the endowment fund for Harvard)

  5. metroplexual says:

    Youch, so much for that free ride I was hoping for, fo my daughter!

  6. Moin,

    I hope i get through to post the links.

    ATA Truck Tonnage index fell Another 0.1 percent in June

    http://www.truckline.com/NR/exeres/F60396F7-098C-47DE-89C4-5BE5C1E9E82A.htm

  7. John M. says:

    twist -

    Who is Andrew Johnson and where have all his experts been hiding?

    “Foreclosures soar in Arizona: Financing deals now haunt borrowers, but ‘correction’ no surprise to experts”, by Andrew Johnson, Arizona Republic, July 31, 2007.

    Many experts say the increase in foreclosures was not unexpected. During the heyday of the 2004 and 2005 housing boom, people who normally wouldn’t have purchased a home were able to do so, thanks to extraordinarily low interest rates and specialty financing deals like adjustable rate and subprime mortgages.

    Now, those factors have come back to haunt borrowers. Many are facing higher payments or balloon payments as part of their financing terms, and have been unable to refinance or sell because of the slumping market. The result? Poor credit scores for overextended homeowners and depressed property values in neighborhoods with large pockets of foreclosed homes.

    While most experts agree the rising number of foreclosures signals a return to normalcy both locally and nationally, it still can have a very negative impact on neighborhoods.

    “If you go into a neighborhood and there’s a lot of foreclosed properties, they’re empty, you don’t know who’s going to buy them, they’re probably not being maintained at the moment,” said Jay Butler, director of realty studies at Arizona State University’s Morrison School of Management and Agribusiness.

  8. John M. says:

    Jan-Martin -

    The rest of the world seems to have freaked out over Oddo (France) and Macquarie (Australia), not to mention AHM, so that oversees markets are down a couple of percent, and the carry trade even seems to be unwinding. If I recall correctly, the first of the month is when a lot of hedgies report. Notwithstanding Paulson talking of containment, is today the day the U.S. markets price in the bulk of the remaining subprime damage?

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