Ebullient Realtors & Collapsing Builders
Next week... Oct 17 CPI, Housing Starts, Building Permits
Financial Reporting
Oct 15 Citigroup
Oct 16 Intel, IBM, JnJ, Thornburg Mortgage, Wells Fargo, Yahoo
Oct 17 Blackrock, Ebay, JP Morgan Chase, MGIC, WaMu
Oct 18 B of A, Google, Nokia
Oct 19 3M, Caterpillar, Honeywell, Wachovia, Xerox
The amount of asset- backed commercial paper outstanding has tumbled to $899 billion in the week ended Oct. 10, from a high of $1.14 trillion at the end of June.
Pot calls kettle black... Deutsche Bank downgraded Citigroup to Sell from Buy. Wachovia cut earnings estimates on the homebuilder's group.
Building collapses... Centex 4th largest U.S. homebuilder, said it will have about $1 billion in expenses to write down property as the U.S. housing slump worsens.
Q2 sales fell 13%, closings were off 14%, the backlog, or homes under contract and not yet sold, fell 38% as the company cut its forecast for cash from operations by 33%.
The 15 largest builders have $7.75 billion in debt due through 2009 and are now selling homes at almost any price they can get.
Truckers get railroaded... After rising 2.5% per year over the preceding decade, the American Trucking Associations Trucking Tonnage Index has fallen 3.8% since June 2006.
In Q3, revenue in J.B. Hunt's traditional trucking division fell 16%, as the volume of shipments dropped 11%.
Using trains for a portion of the transport saves money on fuel and labor. In Q3, J.B. Hunt's intermodal load volume grew 23%, helping intermodal division revenue rise 17%.
California Realtors wax optimistic... C.A.R. economists: "The median home price in California will decline 4% to $553,000 in 2008.
C.A.R. economists also projected a 23% decline in sales this year to 367,500 units compared with 2006.
Historically, the last time the sales level fell below 2007’s projected 367,500 units occurred in 1995, when annual sales totaled 342,540 units.
Sales last fell below 2008’s 334,500-unit forecast in 1985, with 328,270 units.
The last time the statewide median price fell was a 0.5% decline in 1996. The most recent statewide median price decline greater than 4% was a 4.5% decline in 1993."
The Caveat: "Sales could decline more steeply in 2008 if the current liquidity crunch in the mortgage markets has a longer-than-expected duration or if interest rates unexpectedly increase."
The Nattering One muses... Very optimistic, but then again the C.A.R. economists are ON the payroll.
There is no liquidity crunch, its a solvency problem which in the best circumstances will be pernicious.
Through 2008, $600 Billion in ARM mortgage resets will take their toll, existing inventory, foreclosures & REO's on the lenders books will ballon to new all time highs.
And lets not forget the possibility of a recession, ensuing layoffs and a correction in the equities markets to really drive prices over a cliff.
Prices will act like rats jumping from a sinking ship, they can go nowhere but down and sink into the water, rapidly.
Financial Reporting
Oct 15 Citigroup
Oct 16 Intel, IBM, JnJ, Thornburg Mortgage, Wells Fargo, Yahoo
Oct 17 Blackrock, Ebay, JP Morgan Chase, MGIC, WaMu
Oct 18 B of A, Google, Nokia
Oct 19 3M, Caterpillar, Honeywell, Wachovia, Xerox
The amount of asset- backed commercial paper outstanding has tumbled to $899 billion in the week ended Oct. 10, from a high of $1.14 trillion at the end of June.
Pot calls kettle black... Deutsche Bank downgraded Citigroup to Sell from Buy. Wachovia cut earnings estimates on the homebuilder's group.
Building collapses... Centex 4th largest U.S. homebuilder, said it will have about $1 billion in expenses to write down property as the U.S. housing slump worsens.
Q2 sales fell 13%, closings were off 14%, the backlog, or homes under contract and not yet sold, fell 38% as the company cut its forecast for cash from operations by 33%.
The 15 largest builders have $7.75 billion in debt due through 2009 and are now selling homes at almost any price they can get.
Truckers get railroaded... After rising 2.5% per year over the preceding decade, the American Trucking Associations Trucking Tonnage Index has fallen 3.8% since June 2006.
In Q3, revenue in J.B. Hunt's traditional trucking division fell 16%, as the volume of shipments dropped 11%.
Using trains for a portion of the transport saves money on fuel and labor. In Q3, J.B. Hunt's intermodal load volume grew 23%, helping intermodal division revenue rise 17%.
California Realtors wax optimistic... C.A.R. economists: "The median home price in California will decline 4% to $553,000 in 2008.
C.A.R. economists also projected a 23% decline in sales this year to 367,500 units compared with 2006.
Historically, the last time the sales level fell below 2007’s projected 367,500 units occurred in 1995, when annual sales totaled 342,540 units.
Sales last fell below 2008’s 334,500-unit forecast in 1985, with 328,270 units.
The last time the statewide median price fell was a 0.5% decline in 1996. The most recent statewide median price decline greater than 4% was a 4.5% decline in 1993."
The Caveat: "Sales could decline more steeply in 2008 if the current liquidity crunch in the mortgage markets has a longer-than-expected duration or if interest rates unexpectedly increase."
The Nattering One muses... Very optimistic, but then again the C.A.R. economists are ON the payroll.
There is no liquidity crunch, its a solvency problem which in the best circumstances will be pernicious.
Through 2008, $600 Billion in ARM mortgage resets will take their toll, existing inventory, foreclosures & REO's on the lenders books will ballon to new all time highs.
And lets not forget the possibility of a recession, ensuing layoffs and a correction in the equities markets to really drive prices over a cliff.
Prices will act like rats jumping from a sinking ship, they can go nowhere but down and sink into the water, rapidly.
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