First a quick Why You Care publishing note: We will not publish New Year's Eve or New Year's Day, but Next Week's News Today will return on Friday, January 2, 2009.
After the first of the year all eyes will turn to how the Obama administration will stimulate the economy. Why does it matter what it looks like?
Here's why you care: CNNMoney.com's Jeanne Sahadi does a terrific job of sketching out the different ways a plan could take shape. You are going to hear a lot of different numbers thrown around come January, and she does a good job of sorting through how they can be divided and redivided and who stands to get what. We are highlighting her story on this because it is an excellent base coat of paint to understand what will undoubtedly become a political football on Capitol Hill. Do yourself a favor, read her piece, and come next year you'll be ready.
Tuesday, December 30, 2008
Monday, December 29, 2008
The Private Equity Story You Need to Read
We'll guess you took a look at the headline "Private Equity" and "IndyMac" and thought it to be a snooze. You'd be wrong.
Here's why you care: Ask yourself why would private equity want IndyMac? The answer of course is they think they can make some money. The New York Times' Zachery Kouwe points out, "the proposed deal is unusual because it is one of the first transactions involving unregulated private equity firms acquiring a majority stake in a bank holding company." You might say, ah-ha!, this is about regulation and the impact of private equity making such a move. Maybe in the long term. But, in the short term, this is a story about money sitting on the sidelines deciding it is time to take advantage of fire sales. Read this story, then keep your eye out for more like it. We suspect when you see a number of them it will be a sign that the gears of the market are slowly moving again.
Here's why you care: Ask yourself why would private equity want IndyMac? The answer of course is they think they can make some money. The New York Times' Zachery Kouwe points out, "the proposed deal is unusual because it is one of the first transactions involving unregulated private equity firms acquiring a majority stake in a bank holding company." You might say, ah-ha!, this is about regulation and the impact of private equity making such a move. Maybe in the long term. But, in the short term, this is a story about money sitting on the sidelines deciding it is time to take advantage of fire sales. Read this story, then keep your eye out for more like it. We suspect when you see a number of them it will be a sign that the gears of the market are slowly moving again.
Friday, December 12, 2008
30-Year Mortgage Rates Fall a Full Point From October
The LA Times' Tom Petruno reports that 30-year mortgage rates are now at 5.47%, down from 6.46% at the end of October.
Here's why you care: The rest of his report notes that the government regulator which oversees the housing entities Fannie/Freddie thinks rates will go below 4%. You care because this is a sign of actual movement - and a positive sign - amidst much of the bad news in the business pages today. At some point the rate goes low enough that people start buying. What's that number? Tough to say, but dropping rates puts it closer.
You also care because as we've noted there is a split of view points between Treasury and the FDIC on how to help mortgage holders in default. FDIC wants the government to help them directly, while the Treasury wants to drive the lending rate lower to stimulate the market in the hopes that will revive housing prices and thus help those behind in mortgages by lifting their home values. You can bet this article will be cited by Treasury folks as progress - and thus the article will help you understand the forth coming stories regarding the Treasury/FDIC debate.
Here's why you care: The rest of his report notes that the government regulator which oversees the housing entities Fannie/Freddie thinks rates will go below 4%. You care because this is a sign of actual movement - and a positive sign - amidst much of the bad news in the business pages today. At some point the rate goes low enough that people start buying. What's that number? Tough to say, but dropping rates puts it closer.
You also care because as we've noted there is a split of view points between Treasury and the FDIC on how to help mortgage holders in default. FDIC wants the government to help them directly, while the Treasury wants to drive the lending rate lower to stimulate the market in the hopes that will revive housing prices and thus help those behind in mortgages by lifting their home values. You can bet this article will be cited by Treasury folks as progress - and thus the article will help you understand the forth coming stories regarding the Treasury/FDIC debate.
Thursday, December 11, 2008
2Million Jobs Gone in 2009!!???? + Next Week's News Today
Before we get to Next Week's News Today there are two stories that you need to give three minutes to: 1) The LA Times' David Pierson reports that UCLA economists are predicting TWO MILLION jobs will be lost in 2009, and 2) the LA Times' Peter Hong reports that the National Association of Home Builders has pivoted and is "now open" to bankruptcy judges modifying delinquent mortgages.
Here's why you care: First, UCLA has been right in predicting the economy's twists and turns. Second, bankruptcy court has been a controversial proposal. Some see it as a solution, others say it has a downside: Modifying the mortgages means a loss for banks, who will then pass along that loss to the next mortgage applicant by raising lending rates. However, there tide may be turning. You'll see more on this in the coming weeks (note the LA Times story says it would not get voted on until January).
So, if it's Thursday, then it's time for Next Week's News Today where we publish our own futures calendar of earnings, reports, hearings and political events which will either drive the news, or deserve more attention. Last week we were right when we said this week would "see press coverage of, and the market driven by, both Capitol Hill oversight moves, and economic reports..." whether it was TARP reports or hearings.
Next week you'll see press coverage of, and the market driven by, the Fed meeting, unemployment claims, and housing starts/building permits. You'll also see retail examined due to Best Buy reporting earnings and financial institutions who have received Treasury cash injects examined anew due to Goldman Sachs reporting.
Another story thread likely to continue is whether the FDIC's proposal to help homeowners underwater with their mortgages refinance should be green lighted. You saw a number of stories this week, and the debate will continue next week.
Here's why you care about next week's trends in earnings and reports:
Big Names/Retail: Best Buy earnings 12/16.
Interesting self explanatory news peg: Goldman Sachs earnings 12/16.
Reports: Building Permits and Housing Starts (12/16) and Unemployment Claims (12/18).
As always notable earnings, events, and reports are below are below:
MONDAY 12/15
Earnings: ABM Industries; Smith & Wesson Holding Corp.
Reports: Industrial Production
TUESDAY 12/16
Earnings: Best Buy, Goldman Sachs, Verifone Holdings Inc.
Reports: Building Permits (for Nov.), Consumer Price Index (CPI - for Nov.), FOMC Statement, Housing Starts (for Nov.)
Meetings: Federal Open Market Committee Meeting; FDIC Board of Directors meets in open session at 10:00a ET.
WEDNESDAY 12/17
Earnings: ConAgra Foods, General Mills, Micron, Nike, Paychex
THURSDAY 12/18
Economic Reports: Initial Unemployment Claims
FRIDAY 12/19
Events: Nobel Prize winner Paul Krugman, National Press Club, 12:30p ET
Here's why you care: First, UCLA has been right in predicting the economy's twists and turns. Second, bankruptcy court has been a controversial proposal. Some see it as a solution, others say it has a downside: Modifying the mortgages means a loss for banks, who will then pass along that loss to the next mortgage applicant by raising lending rates. However, there tide may be turning. You'll see more on this in the coming weeks (note the LA Times story says it would not get voted on until January).
So, if it's Thursday, then it's time for Next Week's News Today where we publish our own futures calendar of earnings, reports, hearings and political events which will either drive the news, or deserve more attention. Last week we were right when we said this week would "see press coverage of, and the market driven by, both Capitol Hill oversight moves, and economic reports..." whether it was TARP reports or hearings.
Next week you'll see press coverage of, and the market driven by, the Fed meeting, unemployment claims, and housing starts/building permits. You'll also see retail examined due to Best Buy reporting earnings and financial institutions who have received Treasury cash injects examined anew due to Goldman Sachs reporting.
Another story thread likely to continue is whether the FDIC's proposal to help homeowners underwater with their mortgages refinance should be green lighted. You saw a number of stories this week, and the debate will continue next week.
Here's why you care about next week's trends in earnings and reports:
Big Names/Retail: Best Buy earnings 12/16.
Interesting self explanatory news peg: Goldman Sachs earnings 12/16.
Reports: Building Permits and Housing Starts (12/16) and Unemployment Claims (12/18).
As always notable earnings, events, and reports are below are below:
MONDAY 12/15
Earnings: ABM Industries; Smith & Wesson Holding Corp.
Reports: Industrial Production
TUESDAY 12/16
Earnings: Best Buy, Goldman Sachs, Verifone Holdings Inc.
Reports: Building Permits (for Nov.), Consumer Price Index (CPI - for Nov.), FOMC Statement, Housing Starts (for Nov.)
Meetings: Federal Open Market Committee Meeting; FDIC Board of Directors meets in open session at 10:00a ET.
WEDNESDAY 12/17
Earnings: ConAgra Foods, General Mills, Micron, Nike, Paychex
THURSDAY 12/18
Economic Reports: Initial Unemployment Claims
FRIDAY 12/19
Events: Nobel Prize winner Paul Krugman, National Press Club, 12:30p ET
Wednesday, December 10, 2008
Did Treasury Get As Good a Deal as Warren Buffet? Could Downtown Real Estate Prices Torpedo Your Town - Or Be the Next Big Opportunity?
Two stories that will take only a couple of minutes, but you must read today:
1) Last week in our futures calendar - Next Week New's Today - we flagged that the Congressional Oversight Panel for Economic Stabilization's report to Congress was due today. There are a number of great writes today but we like the New York Times' Diana Henriques' report because it lays out the Panel's concern that Treasury's stock purchases in financial institutions at times didn't land the same excellent terms as private investors.
Here's why you care: The story shows that your tax dollars will not get as good of a return as say Warren Buffet or investors from the Persian Gulf buying shares in the same institutions. Also, the report challenges Treasury to explain why they are not embracing the FDIC's proposal to refinance homeowner mortgages currently underwater. We say, call on us, we think we have the answer - in fact explaining that debate is what we posted this past Friday 12/5 - check it out right here.
2) Commercial real estate impacts you in ways you may not think... The New York Times (again) has a must read story by Terry Pristin who reports how vacancies are looming large for downtown commercial space. The reason being is because like homeowners with adjustable mortgages, many of these investors have loans due and were only paying interest on them.
Here's why you care: If you own an apartment or townhouse in an urban area you don't want commercial vacancies, not just because you moved to the city for convenience, but because ultimately it could take down your home value. That said, you care if you are a company doing okay because it means you may be able to negotiate a terrific new lease where you are, or elsewhere. You need to be reading this story. We can tell you, this is what we've been discussing as real estate and finance lawyers. You should be thinking about this as well. One note, Pristin's article uses the term "Special Receiver" - don't worry, it is pretty much what you think. A Special Receiver is essentially a neutral third party that a court can look to for unbiased guidance as to whether the borrower that is behind in payments is keeping to the workout promise. The Special Receiver is a neutral intermediary for the borrower to send the money to, allowing the lender to get a report and payments from the Special Receiver instead of spending time constantly asking the borrower for an update.
1) Last week in our futures calendar - Next Week New's Today - we flagged that the Congressional Oversight Panel for Economic Stabilization's report to Congress was due today. There are a number of great writes today but we like the New York Times' Diana Henriques' report because it lays out the Panel's concern that Treasury's stock purchases in financial institutions at times didn't land the same excellent terms as private investors.
Here's why you care: The story shows that your tax dollars will not get as good of a return as say Warren Buffet or investors from the Persian Gulf buying shares in the same institutions. Also, the report challenges Treasury to explain why they are not embracing the FDIC's proposal to refinance homeowner mortgages currently underwater. We say, call on us, we think we have the answer - in fact explaining that debate is what we posted this past Friday 12/5 - check it out right here.
2) Commercial real estate impacts you in ways you may not think... The New York Times (again) has a must read story by Terry Pristin who reports how vacancies are looming large for downtown commercial space. The reason being is because like homeowners with adjustable mortgages, many of these investors have loans due and were only paying interest on them.
Here's why you care: If you own an apartment or townhouse in an urban area you don't want commercial vacancies, not just because you moved to the city for convenience, but because ultimately it could take down your home value. That said, you care if you are a company doing okay because it means you may be able to negotiate a terrific new lease where you are, or elsewhere. You need to be reading this story. We can tell you, this is what we've been discussing as real estate and finance lawyers. You should be thinking about this as well. One note, Pristin's article uses the term "Special Receiver" - don't worry, it is pretty much what you think. A Special Receiver is essentially a neutral third party that a court can look to for unbiased guidance as to whether the borrower that is behind in payments is keeping to the workout promise. The Special Receiver is a neutral intermediary for the borrower to send the money to, allowing the lender to get a report and payments from the Special Receiver instead of spending time constantly asking the borrower for an update.
Tuesday, December 9, 2008
Half of Modified Mortgages Back in Default
The Capitol Hill/auto makers story will be in the A section of the papers, so we say the one piece you might miss buried in the business section today is from the Associated Press in the LA Times which reports that, "More than half of all homeowners who had their loans modified to make the payments more affordable in the first half of the year are already in default again." You need to give this story a quick read.
Here's why you care: The question is why? Are they now behind on their credit cards too? Is it simply untenable? Is it due to job loss? Those are the questions. You should read this story, because the Federal Reserve can lower rates again, but eventually that gets to zero and then what? The "what" has to be a multi-front approach, but the exact mix will be the source of the debate. Helping homeowners has been a top agenda item for many on Capitol Hill and elsewhere, and this report will give them pause to consider how to get it right. They'll be reading this piece and you should be too.
Here's why you care: The question is why? Are they now behind on their credit cards too? Is it simply untenable? Is it due to job loss? Those are the questions. You should read this story, because the Federal Reserve can lower rates again, but eventually that gets to zero and then what? The "what" has to be a multi-front approach, but the exact mix will be the source of the debate. Helping homeowners has been a top agenda item for many on Capitol Hill and elsewhere, and this report will give them pause to consider how to get it right. They'll be reading this piece and you should be too.
Monday, December 8, 2008
Two Big Stories: Financial Rescue Gridlock? & Big Newspapers Cry for Help
1) Financial Rescue Gridlock? Obama vs.Bush
The eye opening business article today is actually a political article in the Wall Street Journal by Jonathan Weisman and Deborah Solomon who report the current administration and incoming administration are at something of a stalemate on the financial rescue/recovery. Here's the operable sentence from their report which you need to read, "Treasury officials believe Obama aides are being short-sighted in their refusal to offer more policy and lobbying assistance, while the transition team sees an administration looking to be rescued from its own miscues."
Here's why you care: What they are talking about is not just a stimulus package, but also whether to green light the FDIC proposal to help mortgage holders underwater refinance. Why You Care doesn't take political sides, instead would like to make an objective observation. The longer it takes to implement all of the recovery tools, the longer the recovery itself gets postponed. In real terms that means anything that can be done to shorten the durations means less jobs lost, less businesses folding/shrinking, and fewer homes in foreclosure.
Meanwhile, speaking of the Obama economic team, the LA Times' Ralph Vartabedian has a well written piece looking at former Federal Reserve head Paul Volcker's rescue suggestions.
Here's why you care: You care because he's advising Obama. Give this story a quick read when you have a moment because it points the way the Obama team may take in the months ahead. Remember, President-elect Obama noted this weekend there would be more pain ahead, this report on Volcker tracks that sentiment.
2) Big Newspapers Cry for Help in the Business Pages
The LA Times' James Rainey reports that the paper's parent, the Tribune Co. which also own the Chicago Tribune, has filed for bankruptcy. And if that were not enough to catch your eye, the NY Times' Richard Perez-Pena reports that the NY Times Co. is going to borrow $225 million against its NYC headquarters. In other words, the NY Times is taking out a mortgage to make ends meet.
Here's why you care: As many Why You Care readers know we are convinced that if you could just read the business pages with a better base knowledge then you'd see the coming economic waves on the horizon and be able to adjust accordingly. Much of what is happening today was warned some time ago in the business pages. The problem is that you didn't know you cared about credit default swaps way back when. Thus, if newspapers continue to shrink staffs - or in the case of community newspapers go under - then the crucial economic reporting will disappear. Blogs are helpful to gather links, and some have interesting opinions, but real reporting on a daily basis comes from full time journalists. Loose that then what have you got?
Why You Care continues to suggest alternative business models to those who will listen. You know where to find us.
Here's why you care one more time: We can understand why the NY Times is turning to its real estate. It is popular for most businesses to say that their employees are their greatest asset. If that's true, then a business' real estate is its greatest resource. You might say, well our business doesn't own but rather leases. We'd then say, well that still might be a resource.
The eye opening business article today is actually a political article in the Wall Street Journal by Jonathan Weisman and Deborah Solomon who report the current administration and incoming administration are at something of a stalemate on the financial rescue/recovery. Here's the operable sentence from their report which you need to read, "Treasury officials believe Obama aides are being short-sighted in their refusal to offer more policy and lobbying assistance, while the transition team sees an administration looking to be rescued from its own miscues."
Here's why you care: What they are talking about is not just a stimulus package, but also whether to green light the FDIC proposal to help mortgage holders underwater refinance. Why You Care doesn't take political sides, instead would like to make an objective observation. The longer it takes to implement all of the recovery tools, the longer the recovery itself gets postponed. In real terms that means anything that can be done to shorten the durations means less jobs lost, less businesses folding/shrinking, and fewer homes in foreclosure.
Meanwhile, speaking of the Obama economic team, the LA Times' Ralph Vartabedian has a well written piece looking at former Federal Reserve head Paul Volcker's rescue suggestions.
Here's why you care: You care because he's advising Obama. Give this story a quick read when you have a moment because it points the way the Obama team may take in the months ahead. Remember, President-elect Obama noted this weekend there would be more pain ahead, this report on Volcker tracks that sentiment.
2) Big Newspapers Cry for Help in the Business Pages
The LA Times' James Rainey reports that the paper's parent, the Tribune Co. which also own the Chicago Tribune, has filed for bankruptcy. And if that were not enough to catch your eye, the NY Times' Richard Perez-Pena reports that the NY Times Co. is going to borrow $225 million against its NYC headquarters. In other words, the NY Times is taking out a mortgage to make ends meet.
Here's why you care: As many Why You Care readers know we are convinced that if you could just read the business pages with a better base knowledge then you'd see the coming economic waves on the horizon and be able to adjust accordingly. Much of what is happening today was warned some time ago in the business pages. The problem is that you didn't know you cared about credit default swaps way back when. Thus, if newspapers continue to shrink staffs - or in the case of community newspapers go under - then the crucial economic reporting will disappear. Blogs are helpful to gather links, and some have interesting opinions, but real reporting on a daily basis comes from full time journalists. Loose that then what have you got?
Why You Care continues to suggest alternative business models to those who will listen. You know where to find us.
Here's why you care one more time: We can understand why the NY Times is turning to its real estate. It is popular for most businesses to say that their employees are their greatest asset. If that's true, then a business' real estate is its greatest resource. You might say, well our business doesn't own but rather leases. We'd then say, well that still might be a resource.
Friday, December 5, 2008
Unemployment Numbers in Context and Understanding the Competing Mortgage Plans/Debate
There are two must read stories out there today in addition to the enormity of November's job loss numbers - the greatest single month decline since 1974. The first story puts the job loss numbers in better context than other stories, and the second will help you understand the competing visions for mortgage rates in order to stabilize housing prices.
Here's why you care: The New York Times' David Leonhardt's blog "Economix" makes an excellent point. He notes that as bad as the unemployment numbers are today, they are actually worse. Why? The Labor Department doesn't count those that are not looking for work. You care because it means the number is much higher. Take a moment and read his posting, he does a great job of adding context.
Here's why you care about the mortgage plans: Yesterday we highlighted solid reporting on the Treasury's trial balloon which essentially pushes banks to lend to prospective homebuyers at 4.5%, and in return purchasing the mortgages from the banks. The idea being that this would create new buyers, thus stabilize and even eventually raising home prices - and THAT the theory goes - would help existing homeowners who are underwater with their mortgages due to the drop in their home values. Rising tide lifts all boats. If you look closely this has the same goal, but much different execution than the FDIC model which aims to refinance EXISTING homeowners with mortgages underwater.
Lost in much of the coverage is this debate. CNNMoney.com's Tami Luhby has a great breakdown of what Treasury is up to, and the concerns that the plan doesn't do enough - ala not targeting existing homeowners. Read her piece, it will help. However, we'd like to take this one further step based on folks we are talking to up and down K Street, Capitol Hill, and real estate developers - they are concerned there's not a coherent plan. We've made the point often that the market seeks stability, but as long as the debate is going on, there will not be an implemented plan. Meanwhile the clock is ticking and things are not getting better... BUT, the good news is, understanding what's going on will help you understand the story as it develops next week.
Here's why you care: The New York Times' David Leonhardt's blog "Economix" makes an excellent point. He notes that as bad as the unemployment numbers are today, they are actually worse. Why? The Labor Department doesn't count those that are not looking for work. You care because it means the number is much higher. Take a moment and read his posting, he does a great job of adding context.
Here's why you care about the mortgage plans: Yesterday we highlighted solid reporting on the Treasury's trial balloon which essentially pushes banks to lend to prospective homebuyers at 4.5%, and in return purchasing the mortgages from the banks. The idea being that this would create new buyers, thus stabilize and even eventually raising home prices - and THAT the theory goes - would help existing homeowners who are underwater with their mortgages due to the drop in their home values. Rising tide lifts all boats. If you look closely this has the same goal, but much different execution than the FDIC model which aims to refinance EXISTING homeowners with mortgages underwater.
Lost in much of the coverage is this debate. CNNMoney.com's Tami Luhby has a great breakdown of what Treasury is up to, and the concerns that the plan doesn't do enough - ala not targeting existing homeowners. Read her piece, it will help. However, we'd like to take this one further step based on folks we are talking to up and down K Street, Capitol Hill, and real estate developers - they are concerned there's not a coherent plan. We've made the point often that the market seeks stability, but as long as the debate is going on, there will not be an implemented plan. Meanwhile the clock is ticking and things are not getting better... BUT, the good news is, understanding what's going on will help you understand the story as it develops next week.
Thursday, December 4, 2008
Next Week's News Today (Capitol Hill Gears Up on Rescue Oversight, Treasury Mortgage Plan Trial Balloons, and Holiday Shopping Numbers)
Before we get to Next Week's News Today, we want to make sure that the one piece you are reading this morning is on the trial balloon being floated by the Treasury Department. The Washington Post's David Cho, Zachary A. Goldfarb and Dina ElBoghdady have the best write we've seen. Yes it is on page 1, and yes our mission assumes you see the front page and not the business section, but for our non-Washington readers, in particular our West Coast readers - you need to be reading this piece.
Here's why you care: The Treasury's plan appears to say this, "Hey mortgage lenders! Yes you. We are considering putting together a program where if you lend to borrowers at say a really low 4.5%, then bundle those mortgages we'll buy then (actually Fannie/Freddie will buy them). Thus, you'll get cash back for the bundled mortgages just like the old days, and we'll unclog the market. What say?" What's going on here is that the Paulson Treasury has a view point that driving down lending rates will stabilize the market. The FDIC's competing plan also wants to stabilize the markets but thinks it should target existing mortgages under water. We bet you'll see more coverage of this in the coming days. Which means we're looking ahead and it is time for our weekly futures calendar...
If it's Thursday, then it's time for Next Week's News Today where we publish our own futures calendar of earnings, reports, hearings and political events which will either drive the news, or deserve more attention. Next week stands to see press coverage of, and the market driven by, both Capitol Hill oversight moves, and economic reports - specifically the first look at official retail sales numbers for the start of the holiday season.
Here's why you care - Congressional oversight Round I: This week we spotlighted coverage of a Congressional study calling safeguards for the government's financial rescue program lacking. Next week the five member supervisory panel overseeing that rescue program (aka - TARP) will report to Congress. The kicker is that the Senate hasn't confirmed the inspector general for the program. An anonymous Senator is holding up Neil Barofsky's nomination. We suspect that by the time the new report gets to Congress on Wednesday (12/10), that either that hold will be lifted - or there will be lots more press coverage as to why not. You care because after all, these are your tax dollars.
Here's why you care- Congressional oversight Round II: House Oversight and Government Reform Cmte. Chmn. Waxman exams Fannie Mae/Freddie Mac on Tuesday (12/9) - his witnesses? The most recent two CEOs for each of them. We suspect this will garner a fair amount of press attention.
Here's why you care about next week's trends in earnings and reports:
Big Names/Retail: Kroger earnings on 12/9, and Costco earnings on 12/11 stand to be metaphoric news pegs for stories examining the middle class during tough financial times.
Interesting self explanatory news peg: H&R Block earnings 12/8.
Reports: Pending Homes Sales (12/10); Unemployment Claims (12/11); and Retail Sales (12/12) are all strong candidates for market drivers and press coverage. In particular, retail sales because it will be the official number for the first month of holiday shopping.
As always notable earnings, events, and reports are below are below:
MONDAY 12/8
Earnings: H&R Block; Learning Tree International Inc.; National Semicondcutor Corp.; Pep Boys;
Events: Office of Thrift Supervision holds its National Housing Forum at the National Press Club, 9a ET
Hearings: House Ag. Cmte. Chmn. Peterson holds credit derivatives hearing impact on the economy at 1p ET.
TUESDAY 12/9
Earnings: AutoZone; Kroger; Vail Resorts
Reports: Pending Home Sales (for Oct.)
Hearings: House Oversight and Government Reform Cmte. Chmn. Waxman holds Fannie Mae/Freddie Mac government take over hearing. Witnesses: Fmr. Freddie Mac CEO's Leland Brendsel and Richard Syron, and Fmr. Fannie Mae CEO's Daniel Mudd and Franklin Raines.
WEDNESDAY 12/10
Earnings: Multimedia Games, NCI Building Systems Inc.
Congressional Reports: Five Member TARP Supervisory Panel's First Oversight Report to Congress is due.
THURSDAY 12/11
Earnings: Ciena; Costco
Economic Reports: Export Prices (minus agriculture) and Import Prices (minus oil) (for Nov.); Initial Unemployment Claims (for 12/6);
FRIDAY 12/12
Economic Reports: Producer Price Index (PPI) (for Nov.); Retail Sales (for Nov.); Univ. of Michigan Consumer Sentiment (for Dec.)
Here's why you care: The Treasury's plan appears to say this, "Hey mortgage lenders! Yes you. We are considering putting together a program where if you lend to borrowers at say a really low 4.5%, then bundle those mortgages we'll buy then (actually Fannie/Freddie will buy them). Thus, you'll get cash back for the bundled mortgages just like the old days, and we'll unclog the market. What say?" What's going on here is that the Paulson Treasury has a view point that driving down lending rates will stabilize the market. The FDIC's competing plan also wants to stabilize the markets but thinks it should target existing mortgages under water. We bet you'll see more coverage of this in the coming days. Which means we're looking ahead and it is time for our weekly futures calendar...
If it's Thursday, then it's time for Next Week's News Today where we publish our own futures calendar of earnings, reports, hearings and political events which will either drive the news, or deserve more attention. Next week stands to see press coverage of, and the market driven by, both Capitol Hill oversight moves, and economic reports - specifically the first look at official retail sales numbers for the start of the holiday season.
Here's why you care - Congressional oversight Round I: This week we spotlighted coverage of a Congressional study calling safeguards for the government's financial rescue program lacking. Next week the five member supervisory panel overseeing that rescue program (aka - TARP) will report to Congress. The kicker is that the Senate hasn't confirmed the inspector general for the program. An anonymous Senator is holding up Neil Barofsky's nomination. We suspect that by the time the new report gets to Congress on Wednesday (12/10), that either that hold will be lifted - or there will be lots more press coverage as to why not. You care because after all, these are your tax dollars.
Here's why you care- Congressional oversight Round II: House Oversight and Government Reform Cmte. Chmn. Waxman exams Fannie Mae/Freddie Mac on Tuesday (12/9) - his witnesses? The most recent two CEOs for each of them. We suspect this will garner a fair amount of press attention.
Here's why you care about next week's trends in earnings and reports:
Big Names/Retail: Kroger earnings on 12/9, and Costco earnings on 12/11 stand to be metaphoric news pegs for stories examining the middle class during tough financial times.
Interesting self explanatory news peg: H&R Block earnings 12/8.
Reports: Pending Homes Sales (12/10); Unemployment Claims (12/11); and Retail Sales (12/12) are all strong candidates for market drivers and press coverage. In particular, retail sales because it will be the official number for the first month of holiday shopping.
As always notable earnings, events, and reports are below are below:
MONDAY 12/8
Earnings: H&R Block; Learning Tree International Inc.; National Semicondcutor Corp.; Pep Boys;
Events: Office of Thrift Supervision holds its National Housing Forum at the National Press Club, 9a ET
Hearings: House Ag. Cmte. Chmn. Peterson holds credit derivatives hearing impact on the economy at 1p ET.
TUESDAY 12/9
Earnings: AutoZone; Kroger; Vail Resorts
Reports: Pending Home Sales (for Oct.)
Hearings: House Oversight and Government Reform Cmte. Chmn. Waxman holds Fannie Mae/Freddie Mac government take over hearing. Witnesses: Fmr. Freddie Mac CEO's Leland Brendsel and Richard Syron, and Fmr. Fannie Mae CEO's Daniel Mudd and Franklin Raines.
WEDNESDAY 12/10
Earnings: Multimedia Games, NCI Building Systems Inc.
Congressional Reports: Five Member TARP Supervisory Panel's First Oversight Report to Congress is due.
THURSDAY 12/11
Earnings: Ciena; Costco
Economic Reports: Export Prices (minus agriculture) and Import Prices (minus oil) (for Nov.); Initial Unemployment Claims (for 12/6);
FRIDAY 12/12
Economic Reports: Producer Price Index (PPI) (for Nov.); Retail Sales (for Nov.); Univ. of Michigan Consumer Sentiment (for Dec.)
Wednesday, December 3, 2008
Economic Rescue Program Lacks Oversight, Says Congress' Accountability Office
The Washington Post's Amit Paley has the must read article today reporting that the Government Accountability Office (GAO) - aka Congress' way to run numbers and scrutinize projects - says the economic rescue package doesn't have enough safeguards.
Here's why you care: It is your money. The GAO filed both a full report, and a straightforward easy to read two page summary listing off the concerns. Give Paley's story a read and print and keep the two page GAO summary. You'll want this because it contains an excellent timeline of the rescue program that will help you follow the bouncing ball of the Treasury's moves to stabilize the market. Why You Care also thinks that the GAO's concerns will be echoed by a number of members of Congress each time a Treasury or Federal Reserve official testifies on Capitol Hill. Especially when the Senate finally approves the inspector general for the program. It is like a cheat cheat for the coming debate. Hang on to it, you'll be glad you did.
Here's why you care: It is your money. The GAO filed both a full report, and a straightforward easy to read two page summary listing off the concerns. Give Paley's story a read and print and keep the two page GAO summary. You'll want this because it contains an excellent timeline of the rescue program that will help you follow the bouncing ball of the Treasury's moves to stabilize the market. Why You Care also thinks that the GAO's concerns will be echoed by a number of members of Congress each time a Treasury or Federal Reserve official testifies on Capitol Hill. Especially when the Senate finally approves the inspector general for the program. It is like a cheat cheat for the coming debate. Hang on to it, you'll be glad you did.
Tuesday, December 2, 2008
The Recession in Context: How Long Will It Last?
Lots of headlines today that the recession has not only arrived, but has been here for a year. Why You Care says let's focus on the context.
Here's why you care: You need to know two things... First, what's the length of other recessions? Second, how long will this last? Fortunately the New York Times' David Leonhardt has put together a list of the longest recessions in the last century for a little context - it is worth checking out. Second, the LA Times' Maura Reynolds has a story reporting that this recession could last into 2010.
If you take three minutes and look at both of these stories you come to realize, that even if we go half way into 2010 we're no where near the Armageddon of 1929-33. Small comfort, yes.
However, what we do know is that once Wall Street declares a bottom, that is when things will start gradually picking up. Again, small comfort. But, this data is the same information that all of Capitol Hill, K Street and Wall Street are considering and talking about today. In other words, they are looking forward, not backward. That's why given the policy debates going on right now, you should be thinking about it too.
Here's why you care: You need to know two things... First, what's the length of other recessions? Second, how long will this last? Fortunately the New York Times' David Leonhardt has put together a list of the longest recessions in the last century for a little context - it is worth checking out. Second, the LA Times' Maura Reynolds has a story reporting that this recession could last into 2010.
If you take three minutes and look at both of these stories you come to realize, that even if we go half way into 2010 we're no where near the Armageddon of 1929-33. Small comfort, yes.
However, what we do know is that once Wall Street declares a bottom, that is when things will start gradually picking up. Again, small comfort. But, this data is the same information that all of Capitol Hill, K Street and Wall Street are considering and talking about today. In other words, they are looking forward, not backward. That's why given the policy debates going on right now, you should be thinking about it too.
Monday, December 1, 2008
How Much the Rescue is Costing You, and What a Stimulus Plan Might Look Like
Two terrific stories out there today that are both utilitarian, and will help you understand the debate as to what the government should (or shouldn't) do next in the financial meltdown. First, the New York Times' Louis Uchitelle has a forward looking piece analyzing the effectiveness of a stimulus package and what it must look like. Second, CNNMoney.com's David Goldman breaks down how much money the federal government has doled out thus far.
Here's why you care: The new administration has worked quickly to roll out its proposed members for the financial and security teams. A stimulus package is the next logical step toward recovery. You can bet those who have a say, have their own list of what the government has spent thus far, and their own analysis as to what a stimulus package should look like. Reading these two pieces gives you the tools the decision makers have, and it will allow you to understand the news stories come down the pike.
Read these two and be smart.
Here's why you care: The new administration has worked quickly to roll out its proposed members for the financial and security teams. A stimulus package is the next logical step toward recovery. You can bet those who have a say, have their own list of what the government has spent thus far, and their own analysis as to what a stimulus package should look like. Reading these two pieces gives you the tools the decision makers have, and it will allow you to understand the news stories come down the pike.
Read these two and be smart.
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