Posts filed under “Think Tank”


As we await the results of today’s 10 yr bond auction to gauge sentiment on inflation, the US$, US government finances and foreign appetite for longer term treasuries, a less scientific take on inflation expectations is looking at the number of Google search results for Inflation and Deflation. Search results for Inflation total 40,500,000 and only 4,660,000 for Deflation. With the average 30 yr mortgage rate rising to 5.57%, the highest since late Nov, the MBA said refi’s fell 11.8% to the lowest level since mid Nov and has fallen 65% from its high of the year. Purchases though rose for a 3rd week, by 1.1% and are at a two month high as tax credits have helped. ABC confidence rose 2 pts to -47, about in line with the average ytd. Interestingly, the Buying Climate (those that say its a good or bad time to buy things) index rose 6 pts to the highest since March ’08 but its still just 9 pts above the all time low in Oct.
II: Bulls 47.7 v 42.5 Bears 23.3 v 25.3
Bulls at the highest level since Jan ’08, bears lowest since Dec ’07

Category: MacroNotes

Special Master

White House spokesman Gibbs said the new compensation Czar Kenneth Feinberg, who will review “the soundness, the appropriateness” of compensation for top execs of companies receiving government aid, will take the role of “Special Master.” Toto, I’ve a feeling we’re not in Kansas anymore. We must be over the rainbow.

Category: MacroNotes

10 yr auction

The $19b reopening of the May 6th 10 yr auction was mixed as a higher than expected yield of 3.99% was needed to bring out the buyers where the bid to cover of 2.62 was the most since Sept ’07 and above the one yr average of about 2.30. The level of indirect bidders, mostly…Read More

Category: MacroNotes

Gasoline prices, not again?

As if the US consumer didn’t have enough to worry about, following the DOE data, the front gasoline contract is rallying to the highest level since Oct 15th ’08. This morning, AAA said the national average for unleaded gasoline rose to $2.63, the most since Oct 28th ’08, up from the recent low of $1.62…Read More

Category: MacroNotes

TARP Repayment — Some Questions for the “Perfect 10″

Good Evening: There has been no shortage of news items since I last wrote on June 2, but the S&P 500 today closed almost at the same price as it did one week ago. While equities have essentially moved sideways during this time frame, Treasury yields, the dollar, and commodity prices have all risen to…Read More

Category: Markets, Think Tank

3 year auction

With yields at their highest level since mid Nov up 40 bps in just a week and less sensitive to inflation due to its shorter maturity, the 3 year note auction was solid. The bid to cover of 2.82 was the highest since mid Nov ’08 and above the one year average of 2.49. Indirect…Read More

Category: MacroNotes

A Brief History of Credit Disasters

I introduced Josh Rosner at TBP conference as the best analyst you never heard of. Despite his having written extensively on these subjects in a prescient fashion, many investors and fund managers still don’t know who Rosner is.

I want to change that. I asked Josh sometime ago to assemble a timeline of his most important writings and calls, and he has — finally — complied.

-Barry Ritholtz


From Josh:

In July 2001 I wrote:

“Specifically, it appears that a large portion of the housing sector’s growth in the 1990’s came from the easing of the credit underwriting process. Such easing includes:
The drastic reduction of minimum down payment levels from 20% to 0% · A focused effort to target the “low income” borrower · The reduction in private mortgage insurance requirements on high loan to value mortgages · The increasing use of software to streamline the origination process and modify/recast delinquent loans in order to keep them classified as ‘current’ · Changes in the appraisal process which has led to widespread over-appraisal/ over-valuation problems If these trends remain in place, it is likely that the home purchase boom of the past decade will continue unabated. If there is an economic disruption that causes a marked rise in unemployment, the negative impact on the housing market could be quite large. These impacts come in several forms. They include a reduction in the demand for homeownership, a decline in real estate prices and increased foreclosure expenses… These impacts would be exacerbated by the increasing debt burden of the U.S. consumer and the reduction of home equity available in the home…However, a protracted housing slowdown could eventually cause modifications to become uneconomic and, thus, credit quality statistics would likely become relevant once again. The virtuous circle of increasing homeownership due to greater leverage has the potential to become a vicious cycle of lower home prices due to an accelerating rate of foreclosures.

In 2003 & 2004 I was among the first to identify fraud at FNM/FRE while 25 traditional analysts said “buy”. I can offer you report after report on this if it would be helpful.

January 12 2004 the WSJ recognized the views expressed in my reports and wrote:

“If “2003 was the year of questions about Freddie Mac’s accounting, 2004 will likely be a year in which investors increasingly question the lack of volatility at Fannie Mae and regulators take a closer look at their a 1000 accounting practices,” says Josh Rosner, an analyst at Medley Global Advisors, a financial research firm in New York. While Mr. Rosner favors Freddie Mac on a fundamental basis for 2004, he says that the many potential political and regulatory developments that could affect these companies this year could alter that outlook.”

In October 2004 I told the NYT:

“Still, the most damaging legacy of Fannie Mae’s years of unchecked growth may not be evident until the next significant economic slump. Only then, argued Josh Rosner, an analyst at Medley Global Advisors in New York, will the effects of Fannie Mae’s relaxed mortgage underwriting standards be felt. A result could be a more pronounced downturn in the real estate market and more stress on the consumer. ”The move to push homeownership on people that historically would not have had the finances or credit to qualify could conceivably and ultimately turn Fannie Mae’s American dream of homeownership into the American nightmare of homeownership where people are trapped in their homes,” Mr. Rosner said. ”If incomes don’t rise or home values don’t keep rising, or if interest rates rose considerably, you could quickly end up with significantly more people underwater with their mortgages and unable to pay.””

In the October 18, 2004 Newsweek profiled my work:

“A Wall Street analyst raised some red flags about Fannie Mae’s accounting practices long before regulators issued their recent reports, Newsweek reports in the current issue. And that report may rekindle questions about Wall Street’s ability to issue unbiased research. After Wall Street’s biggest firms settled with regulators in April 2003 over charges of fraudulent stock research, the industry promised a new era of independence…There is one analyst who raised some red flags: Josh Rosner of Medley Global Advisors, which sells research analysis to big investors.”

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Category: Bailouts, Credit, Think Tank

On Rukeyser, Financial TV, and CNBC

A smart observer of Business Television writes: The answer to the question was buried in the comment on Rukeyser comment on #9. Louis was by all accounts a genuinely snarling ass of a person but he had an informative show. The two were inextricably linked. Louis didn’t suffer fools, a population he defined as “everyone…Read More

Category: Financial Press, Think Tank

King Report: More BLS Chicanery

> We opined that the May Employment Report would be better than expected due to BLS B/D and other chicanery, and because it was necessary to fabricate a good report. We also said any rally on a ‘good’ NFP would be ephemeral because most people were set up for a better than expected report. Part…Read More

Category: Economy, Employment, Think Tank

Now what?

Now what? With the DJIA back to unchanged on the year, the S&P at the highest level since Nov 5th and the market’s punk reaction to the much better than expected May payroll # (helped by funky estimates within it) where it was one of the few examples since the March lows of stocks not…Read More

Category: MacroNotes