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  • Will 2011 be the year of the option ARM default crisis? Not likely, according to Calculated Risk. He's more concerned with falling home prices and negative equity.  [View news story]
    I agree; additionally, in CRE banks are pushing hard to clean up problem loans (the formerly hugely popular interest only bridge loans) doing workouts to get defaulted loans performing again O(easier in CRE since there is a revenue stream).

    The unfounded fears with regards to CRE were precisely these bridge loans which are now being worked out, and CRE's revenue streams allowed them to keep it together long enough to get them done.

    So, even though rates may go up, CRE will likely be mostly unaffected, and the bridge/ARMs etc on those properties won't create problems.

    If rates drive up dramatically, the workouts will encounter hiccups, and the folks getting extensions to their bridges ELOCs and ARMs will be in a pickle, along with the banks...
    Jan 2 08:19 AM | 1 Like Like |Link to Comment
  • People who have been delaying selling their homes should do so now, a housing industry consultant says. Steve Harney warns the cork in the dam is about to pop: the "cork" being banks' indecisiveness, and the "water" being their bulging stockpiles of foreclosed homes.  [View news story]
    Between having written off bad loans and all indicators showing economy improving and banks balance sheets improving as well, it makes sense the banks would drop product on market... except that a glut of new product hitting thje market in the slow season will only exacerbate housing oversupply and underdemand, drive prices further into the ground and compounded by rising interest rates the problem gets worse..

    And then more people walk away from their underwater homes...

    It's a silly vicious circle, I think this Harney is giving out poor advice. Why anyone who doesn't have to would drop product on the market in January - the weakest month for home sales of the year - is beyond me.

    Even if the banks do pop the cork in Spring, or want to, there's a good chance there will be more clarity on interest rate movement and real housing demand.

    At the end of the day, I expect the banks and buyers to both continue to act with trepidation, and the housing market to continue to be weak and maintain its steady decline. I'd also propose we have a lot of folks who no longer believe in owning real estate - in particular those most screwed by their inability to sell their homes and get a better paying job in another geographic area - and any expectation of rapid movements in residential real estate values without external stimulation is exaggerated..
    Jan 2 08:11 AM | 2 Likes Like |Link to Comment
  • Howard Davidowitz sees a gloomy future for the U.S. economy and wrenching changes ahead in the retail sector. "We have 21 square feet of selling space for every man woman and child in this country. We already have double of what we need. With the explosion of online sales, what happens to all these retail malls and shopping centers which are marginals?"  [View news story]
    We had, 30 years ago, a single large sized shopping center near us, then one opened to the north a bit and they split the retail dollars, then another one opened and another. My area is densely populated but the amount of retail even in this area - not marginal by a long stretch - is still overblown.
    Dec 31 05:58 PM | 1 Like Like |Link to Comment
  • For the second day, fog has stymied ship traffic in the Houston Ship Channel, with 20 ships delayed inbound and 22 outbound, though the Coast Guard expects weather to improve this afternoon. It's not an uncommon winter occurrence in the channel, but it has a disproportionate effect on petroleum products that account for the bulk of the traffic. Crude now +1.5% to $91.25.  [View news story]
    "but it has a disproportionate effect on petroleum products that account for the bulk of the traffic."

    Helloooo supply crunch...
    Dec 31 02:20 PM | Likes Like |Link to Comment
  • It's the time of year for hundreds of 2011 prediction articles, but Charles Hugh Smith goes a more tongue-in-cheek direction - foreseeing QE3 including Treasurys issued directly to households, and markets rising and falling unpredictably but losing money for most. That's not to mention his expectation that President Obama will start subbing for the Lakers and Tim Geithner will head for Dancing With the Stars. (via)  [View news story]
    Wild predictions?

    US annexes Mexico and Canada and adopts the Renmibi as its currency.

    Savor that for a minute!
    Dec 31 02:17 PM | Likes Like |Link to Comment
  • More advice from Pimco's Bill Gross: Invest in Canadian, Mexican, Brazilian bonds - anything but dollar-based debt: "It’s a critical strategy going forward to get out of the dollar and into some currency that holds its value."  [View news story]
    Hedging against dollar is good strategy, but I'd look at economies more likely to hold strong in the event US encounters turbulence, Mexico is too closely linked to the US and I wouldn't do Brazil/Canada for a dozen reasons, but I do like S Korea and India...
    Dec 31 02:14 PM | 1 Like Like |Link to Comment
  • Oil is powering into 2011, with crude moving over the past hour through the $90 mark, now +1.5% to $91.20 and set for its highest annual close since 2007. Pricey crude may not derail recovery, Doug McIntyre argues, but over $100 is another story.  [View news story]
    I still think this is supply crunch going into the end of the year and will rapidly deflate by the end of January...

    Of course I'm pretty much a perma-bear on energy so take that for what its worth...
    Dec 31 02:07 PM | Likes Like |Link to Comment
  • Gold will continue to rise until Ben Bernanke resigns some time in late 2011 amid broadspread deflation, Jim Walker, founder and CEO of Asianomics, predicts. On the euro: "I think there will be an exodus of countries from the euro that just can't stand the pain."  [View news story]
    Euro policy makers have already started making steps towards tighter, not looser, fiscal and political union so I am not so sure Eurozone dissolution is imminent.

    As I have said before many times, the folks most readily spouting this theory are those on the outside, no one on the inside is. Even when Ireland proposed defaulting, they didn't propose leaving the Euro...

    I'm not sold on eurozone dissolution and yeah well not sold on his gold comment either....
    Dec 31 02:05 PM | 1 Like Like |Link to Comment
  • There's a full stock trading day to go before celebrating, but the Dow and S&P 500 have broken into positive ground, with mild positives in all sectors except tech - with heavy dollar volume going through Apple (AAPL -0.6%), Microsoft (MSFT -0.4%) and Cisco Systems (CSCO -0.4%). Nasdaq -0.4%. Bonds' short session is getting a lift from position squaring.  [View news story]
    CES = why tech companies pushing up...
    Dec 31 01:58 PM | Likes Like |Link to Comment
  • It's not too surprising that states forcing mortgage workouts on banks are seeing substantially higher loan modification rates than those with voluntary mediation. The mortgage lending industry is generally opposed to mediation of any kind - but its claims that mods are progressing aren't holding much water so far.  [View news story]
    In the "free market" there are no "do-overs" so of course gov't intervention accelerates and imposes more mods than gov't passivity.

    It's pretty peculiar though that considering mods might keep loans current, where no mods would just force foreclosures on the banks' balance sheet, one would assume banks would want to keep their sheets as productive as possible, but that doesn't seem to be the case.
    Dec 31 01:57 PM | Likes Like |Link to Comment
  • Sprint (S +0.9%) will sink $200M into cash-strapped Clearwire (CLWR -1.3%), while reducing its 54% stake in the company to 50%, predicts Kaufman Bros. In a potentially ominous sign, Clearwire's chairman Craig McCaw stepped down today. Kaufman maintains a Hold on Clearwire.  [View news story]
    Clear service in my area is New Kid on the Block with Incumbent level pricing.

    They are lost, confused, and in denial if they think they will generate any momentum. If I were running Clear I'd be on the phone with MetroPCS to try and learn something and to maybe strike some kind of deal. Clear needs it and Metro could likely benefit more than the rumoured talks with TMobile.
    Dec 31 01:53 PM | Likes Like |Link to Comment
  • In a classic bullish sign for the New Year, copper jumped 1.4% to advance to a record high in overnight trading. While it’s easy to make a bullish case for a continued copper climb - as Bruce Krasting says, “Why buy an ounce of something (gold) for $1,600 when you can have a whole pound of something else for only $5?" - a correction of some kind seems inevitable.  [View news story]
    It's a good perspective; recently remodeled my house, and saw the sheer amount of copper pipe and copper wire that went in and was pretty impressed. No gold in it though! (Maybe in my electronics?)
    Dec 31 01:49 PM | Likes Like |Link to Comment
  • Disruptions in coal production from Australian floods may help raise the price of coal 20% or more, to the benefit of Canadian miners. Teck Resources (TCK) rose to a 5 year high yesterday, while Grande Cache Coal (GACHF.PK) is up 60% since October.  [View news story]
    I wonder how this will affect coal based energy utilities.
    Dec 31 01:47 PM | Likes Like |Link to Comment
  • Amid struggles for the eurozone and new predictions of demise for the euro, Estonia officially joins the common currency after midnight. “Whatever happens, our currency is tied to the euro,” says the head of an Estonian bank adding, “being inside is better than being outside."  [View news story]
    Poland - one of the best performing "European" economies, is still expecting to join, still wants to, and shares the Estonian sentiment. but not yet, the feeling being the Euro is going through a rough patch at the moment.

    It will be interesting to see what they do. Even during the worst of it, Europe took pains to remind everyone that the line of countries trying to get in was longer than the line of countries anxious to get out.
    Dec 31 01:46 PM | Likes Like |Link to Comment
  • Dress Barn (DBRN), Home Depot (HD) and other retailers urge the Fed to drop a proposal that would require credit card issuers to consider only a borrower's "independent" income rather than household income. They say the new standard could make it difficult for some customers, especially stay-at-home moms, to get credit quickly.  [View news story]
    Meh I'd rather have the credit unworthy not get credit. I'd guess we'd have less problems floating through the financial system, less buying on credit (i.e. money not yet earned) and potentially better terms on what cards do get issued.

    I suspect the counter argument would be that freebies to good borrowers (miles, points etc) are funded by fees assessed against bad borrowers, but I'd suggest the flip side is, less losses to credit issuers mean lower cost of doing business.

    Stay at home moms can still use debit cards...
    Dec 31 01:43 PM | Likes Like |Link to Comment