The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

(For those of you sick of hearing about the book, register, then “deselect” bailout nation as a category — you will never see another post on the subject again!)

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At long last, the date is finally here: The book officially publishes today, May 26, 2009.

Some pretty encouraging news so far on sales.  As of lunch today, we hit # 278 in Amazon sales rank (all books).  And, we were #50 in the Business & Investing category.

That’s a great start, but I’d like to bust into the top 100 of all books, and the top 10 of biz books.

I have been discussing to Wiley about doing some special promos for blog readers, and we came up with a few ideas. A new promotion will roll out each week.

For starters, its a free book plate — order from any of the sources on the site (Amazon, B&N, Borders) and the first few 100 get a signature plate for their book. Yes, I am manually signing 500 of these.  Go to this link to register for the signed plate insert.

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Amazon.com Sales Rank: #278 in Books (See Bestsellers in Books)

Popular in these categories: (What’s this?)

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Tonight at 5:15pm, CNBC’s Fast Money.

I will be appearing on the show tonight to discuss the latest housing data, bailout news,  and perhaps a new book that might be worth mentioning . . .

The show is on at 5pm, and then rebroadcast at midnight.

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UPDATE: Nice intro! The full Video is here.

Hey, put a BandAid on that, or it might get infected!

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The Committee on Capital Markets Regulation has a proposal to fix the financial. I only gave it a quick look through, but what I saw was pretty milquetoast:

Here’s the highlights — a list of obvious fixes — via Real Time Economics:

-Keep two or three regulators for the financial system – the Fed, a new U.S. Financial Services Authority, and an investor and consumer protection agency. The USFSA “would regulate all aspects of the financial system, including market structure and activities and safety and soundness for all financial institutions.”

-Mandate centralized clearing of credit default swaps. To the extent that some CDSs stay outside a centralized clearing process, the committee calls for higher capital requirements to “compensate for increased systemic risk of these contracts.”

-Don’t make a hasty decision to raise capital requirements across the financial sector until more analysis is done. But the committee does recommend higher capital requirements for megabanks, such as those with more than $250 billion in assets.

-Strengthen the “leverage” capital ratio, and debate whether the leverage ratio should be based on common equity rather than total Tier 1 capital.

-Give the Fed temporary authority to evaluate confidential information supplied by hedge funds.

-Relax acquisition rules to make it easier for private equity firms to pump money into the banking sector.

-Create a comprehensive policy called the Financial Company Resolution Act, that would be allowed to put any financial company into receivership, not just “systemically” important ones.

-Ban or limit high-risk mortgages from being securitized.

Nothing about beefing up the SEC, or anything remotely controversial.

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Sources:
The Global Financial Crisis: A Plan for Regulatory Reform
The Committee on Capital Markets Regulation, 5/26/09

http://www.capmktsreg.org/

http://www.capmktsreg.org/pdfs/TGFC-CCMR_Report_(5-26-09).pdf

How to Fix the Financial System
Damian Paletta
Real Time Economics, May 26, 2009, 12:01 AM ET

http://blogs.wsj.com/economics/2009/05/26/recommendations-for-the-supervision-of-financial-markets/

An example that the more the US govt gets involved in cleaning up the
economic mess, the longer it will last, aka Japan, Fitch is forecasting
that between 65-75% of mortgage loans that are modified will redefault
after 12 mo’s. An example of the damage that can be done to a family by
artificially modifying a loan for one who should be renting and
redefaults in 12 mo’s and thus prolongs the agony and delays the
inevitable, is the money that a family spends each month on a mortgage
during the initial 12 after modification that can be used for renting at
a lower monthly price, with money leftover. It’s not the same as owning
one’s own home but it improves the financial health of the family. The
foreclosure process however painful also more quickly clears markets and
brings out demand. The homeownership rate is now 67.5% versus the
average of 65.3% dating back to ’65 and we need to get back to that
average and not keep artificially propping it up.

Well, I asked for lower prices earlier, and that’s what we got:

Home prices continued falling at record paces, according to the Case Shiller Home Price Index.

Annual (-19.1%), quarterly (-7.5%) and monthly (-2.2%) data continue to show prices reverting back towards levels not seen for years.

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March 2009 Case Shiller Home Price Index

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As of the most data, prices have returned to 2002 levels; Will pre-2000 levels be next?

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S&P/Case-Shiller U.S. National Home Price Index

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Sources:
Nationally, Home Prices Began 2009 with Record Declines
S&P, May 26, 2009

http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,2,1,0,0,0,0,0.html

Who would have thought that the best friend of a US$ bull would be Kim
Jong Il but it was North Korea’s missile and nuclear test that bounced
the $ after 5 days of selling last week. Commodities are lower as a
result and helping to pressure crude is the realization (as expected)
that nothing new will come out of the OPEC meeting on Thursday after the
Saudi oil minister said they will ‘stay the course.’ US$ 3 mo LIBOR rose
after 38 straight days of decline which took its spread to fed funds to
the lowest since March ’08. Some can attribute the fall to the thawing
of the credit markets but its more likely due to a flood of deposits
into banks and an implicit guarantee of the viability of the large banks
thus making interbank lending relatively risk free. Yesterday Germany’s
IFO was a touch less than expected and the current outlook fell to a
record low dating back to ’91. S&P/CaseShiller HPI is expected to fall
18.4%.

Mark Gongloff touches upon some truisms in today’s Ahead of the Tape column in the WSJ. Most significantly, he quotes Rosie on the Shadow Inventory, which when you include REOs and spec investors waiting to put their involuntary rentals back on the market, sends total inventory back over 12 months suppy.

But he mentions something I find curious: “A consensus is forming that home sales and construction are at long last bottoming and may soon rise. Economists largely expect this week’s numbers to affirm that notion.”

Consensus? Why should investors — or homeowners, for that matter — care much about the opinion representing the consensus view? That consensus missed the credit bubble as it formed, wrongly believed the sub-prime issue were “contained,” and utterly missed the top in housing. If you followed th consensus, o lost 50% of yuor money last year, saw your home value drop 30%, and generally got mangled in most asset classes other than Bonds, Cash and Gold.

Indeed, its hard to think of anything the “consensus” view got right when it comes to Housing and credit over the past decade.

As to halting the fall of prices, I believe that’s backwards — we want prices to normalize, so that more people can afford homes. Until that happens, Housing cannot begin to recover.

This week’s data: S&P Case-Shiller HPI today at 9:00am; Existing Home Sales Wednesday at 10:00am; New Home Sales Thursday at 10:00am.

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Previously:
More Job Losses = Greater Foreclosures (May 25, 2009)

http://www.ritholtz.com/blog/2009/05/job-losses-foreclosures/

NAR Housing Affordability Index is Worthless (August 13th, 2008)

http://www.ritholtz.com/blog/2008/08/nar-housing-affordability-index-is-worthless/

Source:
True Housing Recovery Depends on Prices
Mark Gongloff
WSJ, May 26, 2009

http://online.wsj.com/article/SB124328420507952007.html

One of the industry’s top rated Technical Analysts, John Roque, has left his former firm of many years, Natixis, for WJB Capital Group.

Good luck in the new shop, John. Looking forward to seeing your research continue as before.

Is it just me, or have there been lots of high profile job swapping going on?

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Previously:
John Roque, technical analyst at Natixis Bleichroeder

http://www.ritholtz.com/blog/2008/11/john-roque-technical-analyst-at-natixis-bleichroeder/

Source:
WJB Capital Group Expands its Strategy Platform and Sales Force With the Hiring of Two Former Natixis Bleichroeder Managing Directors
PRNewswire, May 18 2009

http://sev.prnewswire.com/banking-financial-services/20090518/NY1795618052009-1.html

U.S. Week Ahead: Housing Data Deluge 5/24/2009

Lots of housing data will be in the spotlight during the week. Existing home sales, Case Shiller data and new home sales are among the highlights. There will also be results from JCrew, Dell and Costco, among others. (May 22)

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Asia’s Week Ahead: Data, Dragon Boats Coming 5/24/2009

Japan’s monthly economics report, Japanese car sales and expectations about the country’s employment situation are all on the agenda next week. India will give a reading on its gross domestic product.

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Geithner Dismisses GOP Socialism Charge as ‘Ridiculous’ :