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Joe do you the market will be going up or down next week? Thanks...from some one who is getting killed...thought for sur that we would see a pull back this week and of all the times that I do not place a stop....I'm almost done and it's killing me how much I have lost...
MGIC going down...
NEW YORK, July 16 (Reuters) - Mortgage insurer MGIC Investment Corp reported a wider quarterly loss and said it will stop writing new business as losses mount in the battered housing sector, sending its shares down 14 percent in premarket trade.
You basically cannot finance a home purchase with more than 80% LTV (loan to value) without private mortgage insurance - that is, insurance that covers the lender if you default and they take a loss.
MGIC (NYSE: MTG) is the largest issuer in this area. They said they will be "trying" to capitalize a new company to write this business, but their continuing losses - which, by the way, they said they thought they had under control last year after repeated flirtations with going under outright - has apparently forced this decision.
There is absolutely no way to read this as anything but an outright disaster for the housing industry.
We need to force lending back to 80% maximum LTV (20% down payments in CASH) and 36% DTI (debt-to-income) ratios maximum, but the housing industry has continued to rely on and demand access to money on looser (that is, more leveraged) terms.
The problem is that there's no way to do that and turn a profit, as MGIC continues to show. Between them and PMI, the other "big" player in this space (due to report in August) they provide the backing for these high-LTV loans - backing that is now disappearing.
Let me be clear: this sort of lending needs to go away, but essentially the entire thesis behind those who claim that we're "bottoming" in the recession and the housing market depends on the availability of private mortgage insurance so these loans can be funded, securitized and financed, including but not limited to funding by Fannie and Freddie.
Put a fork in the calls for a bottom to housing folks - we're going back to sustainable lending whether the Realtors Guild and Housing Crooners like it or not.
With the death of the "housing has bottomed" call will come an end to those who claim that the economy has turned. It may take an hour, a day, a week or a few months before these folks realize they were wrong, but there's no way around the conclusion given this set of facts.
Googles getting hamered in a/market. Still cannot beleive that the market went up today, I'm about ready to give up any logical thinking why this is occuring
I can't beleive the market is up now...what a rigged wallstreet runnig Gov't piece of shit system
Secret aggremment?
Bank of America (BAC) is reportedly operating under a secret regulatory agreement requiring it to overhaul its board and address certain risk and liquidity problems. Federal regulators imposed the memorandum of understanding in May, giving the bank a chance to work out its problems in private, but also surprising some bank executives who hadn't expected such a formal rebuke. Sources say Bank of America is coming up against some July and August deadlines, but may get an extension on certain tasks, such as replacing the majority of its board with new directors.
July 15 (Bloomberg) -- The VIX rose with the Standard & Poor’s 500 Index, a sign from the options market that the steepest three-day rally for stocks since June is poised to end.
The Chicago Board Options Exchange Volatility Index, as the VIX is known, added 1.7 percent to 25.44 at 2 p.m. in New York. The S&P 500 gained 2.4 percent. They have moved in the same direction 6 percent of the time since January 2003, according to data compiled by Charles Schwab Corp. The S&P 500 reversed course the next day 66 percent of the time, including seven of the past nine instances.
“That is remarkable,” Randy Frederick, head of trading and derivatives at Charles Schwab in Austin, Texas, said of the tandem move by the S&P 500 and VIX today. “The VIX is expecting something here, either a pull back this afternoon or tomorrow.”
Both indexes rose on July 6. The next day, the S&P 500 retreated 2 percent. The volatility benchmark, known as Wall Street’s “fear gauge” because it almost always increases as stocks fall, reflects expectations for price swings for the next 30 days and is calculated from S&P 500 options that are one or two months from expiration. Higher levels signal more risk in equities. "
Joe do yo own any FNM-...?Also what do yo think of the ^vix gong higher today ? Thanks
I beleive that we were in fo a piull back about 2 weeks ago and I got into EDZ FXP SRS...I'm out now but I think we are going to trade up and down for a while...100 points up...100 down I think that we'll pull back to DOW at 7300 or so....just wished I should have shorted more...URE...AIG is pretty nuts now...
thanks
and this means?
AIG just keeps going lower, man I knew I should have shorted that one
Thanks But I just copied...
it's going to pull back dude...tomoroow we'll be up ...it's gong to be a see-saw for 1-2 months..then we'll drop for 1-2 months DOW to 6000 look at EDZ FXP SRS for 2 months you'll make some $
AIG ws a no brainer to short when it reverse split...shoulda , coulda , woulda
What about groceries...not too sure about you folks but my grocery bills for my wife and 2 kids are rising and rising
Why the DOW is headed for 6000
Whether you’re a bull or a bear, we can all agree on the following fundamental-facts:
Deleveraging Consumers and Businesses. Everyone (except for the government) is tightening their belt and reducing their consumption. Government alone cannot carry the economic load forever, and if consumers (or businesses) don’t quickly step in we may face a double-dip recession. The $64,000 question is: How does the private sector look (or what’s left of it)?
Unemployment Is Above 9% and Climbing. Unemployment is a lagging-indicator, and historically continues to get worse even if the economy picks up. This bit of bad news is not going to get better anytime soon, even if you think the economy is recovering now!
Depressed Wages. Many corporations take advantage of high unemployment levels to keep wages down for their existing employees. This makes sense for the firms (the weaker economy justifies lower wage growth) but it has the unintended consequence of reducing the purchasing power of those already employed.
Demographic Disaster. If consumers are the engine of the US economy, then Baby-Boomers are the turbo-charger; since they make up such a large demographic. But Baby-Boomers are nearing retirement and even if the economy picks up this year they have a lot of saving to do in order to repair the massive damage to their wealth. In short, deleveraging consumers & businesses, unemployment, depressed wages, and fortifying baby-boomers cast doubt on the bulls believe the economy is going to rebound…at least not by the consumer.
Catch 22. Corporations cannot lead a recovery until banks are healthy. But banks cannot repair their balance sheets until they can lend to consumers that are both financially sound (which they are not), and willing to borrow (which they do not). But if things continue as the current rate (or “improve” only slightly) then banks cannot rebuild their balance sheets because for every item a bank recapitalizes, it faces another default somewhere else (foreclosure, credit cards, etc).
Government Tapped Out. The resources and credit-worthiness of the US government are almost unlimited. Almost. But there’s only so much the government can borrow before it too must tap-out. Furthermore, if the borrowing becomes too excessive, then the medicine will become worse than the disease. Too much borrow may eventually crowd out private sector borrowing, increase borrowing costs, place a huge burden on taxpayers which reduces future consumption and economic activity, etc.
Global Economic Decline. The US cannot export itself out of this problem, because the rest of the world is in the same position (if not a lot worse). The BRICs (or any other emerging market) grow largely due to exports and not organic domestic-growth. The OECD nations are all sickly, one worse than the other. Unfortunately, bad economic news has come “not as spies, but as battalions”.
Fear, Greed, & Beauty-Contests
So where is the DOW headed, as we enter Q2 earnings season? In the end, Q2 earnings will not matter. Nor will the mountain of forecasts dissecting it. What matters is how the market responds to Q2 earnings. As a trader, I agree with the Keynesian “beauty contest” rule: to determine winners of a beauty contest look to and anticipate the judge’s decision and don’t bother deciding who you think will win because you think they’re “pretty”. In short, what the market thinks matters, even if you think the market is “wrong”.
The rally off the March lows was based on shifting-sentiment. Fear of losing out on the rally, greed to jump in and make profits, and “pricing in” (or hoping for) a quick recovery. What the market thinks matters, even if you think the market is “wrong”. But the market is also self-correcting…like the cartoon character that has run off the ledge of the mountain, once it realizes its predicament, it will eventually come crashing down (or, “mark to market”).
OOPS, I DID IT AGAIN…I MADE YOU BELIEVE
The things you can always count on are: death, taxes, and whipsaw. Any trader worth his or her salt can attest to the fact that the market throws some wicked sucker punches, or whipsaws. Prior to a major rally, market participants will become convinced that the sky is falling (think fear). Right at a market top, investors and traders will be told that good times are here to last, things are “really different” this time, if you don’t buy now you’ll miss the opportunity of a life-time (think greed), “green shoots”, etc. The cycle repeats itself, ad infinitum.
Trading Options
If you believe that the market has rallied on sentiment, and not sound structural economic changes; if the seven-fundamentals I’ve outlined give you pause, then trade defensively and consider shorting via the Direxion 3-times leverage Bear ETFs (BGZ, TZA, FAZ). The additional leverage allows you to produce larger gains while committing smaller amounts of your capital.
So when should traders commit capital? I’ll save the technical-&-fundamental analysis of “entry-points” for another article, but the chart below shows that the 8,200 level for the DOW is critical from a trading perspective (since the March rally, we’ve hit but not broken through the 8,200 support level…at least, not yet). But that’s a discussion for another article…
God your good, Joe what I do not understand is how a BK comp. bonds increase in value? showing my limited investment knowledge
Can't belive that AIG is actually up in premarket...especially this premarket, going to be a down day and I think the next 4-6 weeks
CKSW Good to short
SWI good to short
Thats why I'm in SRS recently
JAZZ is performing rather well this morning
Joe What is the importance of this Fibonacci retracement?
Does this reflect a pull back or support for the market?
Great call on HUN 1
Do you think the s/p on ACAS has bad news all in?
Thanks !
Do you still have the remaining 3/4'S of your TZA? I got into FAZ and FXP 3 days ago, I'm still up $ but their going down rather quickly and I would hate to sell at even or a loss knowing that I was up. I personaly feel that we should have a pull-back in the market however not 100%...pls advise on TZA Thanks
Joe: First of all thanks so much for all the info that you post. Out of all the boards and stock sites, I view your postings and info to be most valuable. Your also one of the few who post when they "buy". Regarding the graph below, I am still trying to understand if the leadership ratio has turn negative or not? Can you please advise, thanks
Joe: this is a site that I use
www.stockhouse.com
also HOU for oil (HNU = gas)
Misleading housing data
Misleading Gains in Housing Data
Posted: June 16, 2009 at 7:38 am
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Housing Starts came in much better than expected, on the surface. We saw a reading of 532,000 on housing starts on an annual basis. This is a gain of 17.2% and we were only expecting a 7% gain from the Dow Jones consensus. This sounds huge on the surface, but the number is not exactly what it sounds like on the headline data.
Be advised that this number was very skewed because there was a surge in apartments. The single-family numbers were “only” up 7.5% for May. The balance of the gains came from apartments and other multi-family units.
Building permits rose 4.0% in May to 518,000 annualized and Dow Jones had an economist consensus estimate at a 2.4% gain of about 510,000 annualized units.
Also look at HNU.TO on TSX follows UNG less expensive