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Hat tip Flowing Data

The Oct Nat’l Assoc of Home Builders index, an index measuring home building sentiment, was 18, 2 pts below forecasts and down from 19. Present conditions fell 1 pt while future expectations fell 2 pts. Prospective Buyers Traffic fell 3 pts as the West, South and Midwest regions dropped with the West showing the biggest fall of 3 pts. The Northeast saw a gain of 1 pt. The uncertainty of the fate of the home buying tax credit likely had an impact but whether the number was 18, 19, 20 or 21 is splitting hairs as 50 is the breakeven among builders viewing things as good or poor. The high in the last cycle was 72 in June ’05 and got as low as 8 in Jan ’09.

Ron Griess of The Chart Store asks:

The weekly low on the S&P was 32 weeks ago during the week ending March 6, 2009.

From that low (666.79) to yesterday’s high (1,096.56), the S&P was up 64.46%.

When is the last time the S&P had a 32 week ROR of that magnitude or higher?

Answers after the jump

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Here is an interesting data point you may have missed: A study found that securitized mortgages were five times as likely to be delinquent as mortgages that were not resold to securitizers.

Kinda makes you think that the banks that planned on keeping their mortgages had different lending standards than those that knew the paper would be off their hands soon. (Approximately one in eight homeowners have had their mortgages securitized). I do not recall the data source, but sub-prime mortgages are also much more likely to be securitized than prime mortgages are.

The graphic from Pro-Publica is probably the best explanation I have seen on the securitization process yet:

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Hat tip Paris-SF

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Sources:
Bundled Mortgages Pose Problems for Housing Program
Karen Weise
ProPublica – August 6, 2009

http://www.propublica.org/ion/bailout/item/making-home-affordable-loan-modifications-denied-806

Bundled loans stall modification plan
Marketplace, August 6, 2009

http://marketplace.publicradio.org/display/web/2009/08/06/pm-loan-mods/

Bernanke talks nothing about monetary policy and keeps his speech focused on Asia and our trade relationship with them. His bottom line, the US needs to save more, Asia needs to consume more and this would rebalance trade imbalances. Of course with US interest rates at zero, savings in the US has been more of necessity rather than due to the attractiveness of the yields on savings accounts.

Chairman Ben S. Bernanke

At the Federal Reserve Bank of San Francisco’s Conference on Asia and the Global Financial Crisis, Santa Barbara, California

October 19, 2009

Asia and the Global Financial Crisis

The rise of the Asian economies since World War II has been one of the great success stories in the history of economic development.  Japan’s transition to an economic powerhouse was followed by the rapid ascent of the Asian tigers, and subsequently by China taking a prominent place on the world economic stage.¹ Since the beginning of this decade, Asia has accounted for more than one-third of the world’s economic growth, raising its share of global gross domestic product (GDP) from 28 percent to 32 percent.² Importantly, its economic success has resulted in large-scale reductions in poverty and substantial improvements in the standards of living of hundreds of millions of people.  China and India, which together account for almost 40 percent of the world’s population, have seen real per capita incomes rise more than 10-fold and 3-fold, respectively, since 1980.  As would be expected given the increasing size and sophistication of their economies, the nations of the region have also begun to exert a substantial influence on global economic developments and on international governance in the economic and financial spheres.

It is widely agreed that a key source of Asia’s rapid advancement has been the openness of countries in the region to global trade and finance.  Notwithstanding this consensus, the considerable progress of these countries in developing domestic institutions, policies, and industrial capacity–together with their strong growth in the initial phase of the ongoing global financial crisis–led some to speculate that the Asian economies had “decoupled” from the advanced economies of North America and Europe.  Of course, in hindsight, given the magnitude of the shocks that have struck these advanced economies over the past two years, as well as their strong economic and financial links to Asia, it should not have been surprising that Asia was ultimately hit quite hard by the global downturn, even though the origins of the turmoil were elsewhere.

As a prelude to the papers and discussions to follow, I will provide a brief overview of the Asian experience during the global financial crisis.  I will highlight the diversity of experiences, both within Asia and between Asia and other regions, and draw some inferences about the different channels through which the effects of the financial crisis were transmitted around the world.  I will discuss Asia’s policy response to the economic and financial consequences of the crisis.  Finally, I will focus on medium-term challenges.  For both Asia and the United States, perhaps the greatest medium-term challenge is to achieve more balanced growth and, in the process, to further reduce global imbalances.

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Set your Tivos for Frontline tomorrow night:

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click for video

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Excerpt:

“We didn’t truly know the dangers of the market, because it was a dark market,” says Brooksley Born, the head of an obscure federal regulatory agency — the Commodity Futures Trading Commission (CFTC) — who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country’s key economic powerbrokers to take actions that could have helped avert the crisis. “They were totally opposed to it,” Born says. “That puzzled me. What was it that was in this market that had to be hidden?”

The Warning: On air and online October 20, 2009 at 9:00pm (check local listings)

With Barron’s now chiming in with its belief of what Bernanke should do with rates, and that is higher, as emergency rates are not appropriate now that the emergency has receded, Bernanke speaks at 11am on Asia and the Financial Crisis where off topic monetary policy comments are always possible as its getting tougher for him to avoid talking about the near record low in the US$ and record high in gold. For years, government officials would say the market should set the FX rate but it is the direct impact of government policies that has debased the $. Since 1999, the first time DJIA 10,000 was reached, federal government debt has risen 95% while nominal GDP is up just 47%. The Oct Nat’l Assoc of Home Builders index is expected to rise 1 pt to 20, the highest since April ’08 and would be up for a 4th straight month. The uncertainty over the extension of the tax credit could influence the number.