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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: RodgerRafter who wrote (18675)	12/15/2004 5:33:12 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Treasury´s Snow says Bush ´re-affirmed´ dollar policy Wednesday, December 15, 2004 9:20:04 PM afxpress.com Treasury's Snow says Bush 're-affirmed' dollar policy WASHINGTON (AFX) -- Treasury Secretary John Snow said Wednesday that President Bush reaffirmed the long-standing "strong dollar" policy when he told reporters in the Oval Office his administration was committed to reducing the deficit to encourage foreigners to buy the greenback. "I think what the president did today was re-affirm the strong dollar policy," Snow told a small group of reporters at the Treasury Department. Earlier Wednesday, Bush said the U.S. is committed to a strong dollar and believes the market should set exchange rates. Snow added that the dollar policy has been articulated often and "it should be" well understood forexstreet.com Some things are just too funny to not report Mish

To: RodgerRafter who wrote (18675)	12/15/2004 6:08:17 PM
From: mishedlo	Respond to of 116555

Lennar quarterly profit up 34 pct, raises outlook Wed Dec 15, 2004 08:12 AM ET NEW YORK, Dec 15 (Reuters) - Lennar Corp.(LEN.N: Quote, Profile, Research) , the No. 3 U.S. home builder, on Wednesday said quarterly earnings rose 34 percent and raised its earnings forecast for fiscal 2005, despite a slowdown of orders. For the fiscal fourth quarter ended Nov. 30, Miami-based Lennar earned $379.7 million, or $2.29 per share, compared with $283.2 million, or $1.69 per share, a year earlier. Analysts on average expected the company to earn $2.19 per share, down from $2.24 expected before the company in November warned of sluggish orders, according to Reuters Estimates. Revenue rose 21 percent to $3.6 billion with home sales up 26 percent to $3.4 billion due to a 12 percent increase in the number of closings and a 12 percent rise in the average home price to $287,000 from $255,000 last year. New home orders for the quarter rose 5 percent, as an 11 percent decline in sales in the pricey East, where hurricanes in Florida stalled sales, were offset by a 23 percent increase in the less lucrative Central region. Orders in the West rose 4.4 percent. Last year, new orders rose 19 percent, juiced up by strong demand in the lucrative East and West. However, last quarter, new orders inched up only 1 percent. Lennar ended the quarter with 15,546 homes on order and awaiting to be built, up 11.8 percent over last year. The value of the homes rose 30 percent to $5.1 billion. The backlog of homes combined with the company's land cache land-strapped areas prompted Lennar to raise its earnings goal for fiscal 2005 to $6.90 per share a prior forecast of $6.60. Analysts had on average expected fiscal 2005 earnings of $6.30 per share, according to Reuters Estimates. In premarket activity on INET, Lennar shares traded at $51.50, up from its Tuesday closing price of $50.83. yahoo.reuters.com

To: RodgerRafter who wrote (18675)	12/15/2004 6:14:30 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Federal Regulators Voice Concerns About Booming Home Equity Credit Lines by Kenneth R. Harney Federal financial regulators are hoisting cautionary red flags about the most popular real estate equity-tapping tool in the American marketplace: Home equity lines of credit. New home equity lines, or HELOCs as lenders call them, have mushroomed in recent years. Whereas in 1990 American banks and thrift institutions originated approximately $85 billion worth of HELOCs, during the first half of 2004 alone they originated over $416 billion. This year could prove to be the first $1 trillion-plus HELOC year in new origination volume. Though fixed-term home equity loans -- second mortgages -- were the primary form of home equity lending in the 1980s and much of the 1990s, floating-rate HELOCs now hold an 80 percent market share versus 20 percent for conventional fixed-term equity seconds. That "explosive growth" is not surprising, according to a new report from the Federal Deposit Insurance Corp., because HELOCs are convenient, low-cost tools to convert frozen home equity into spendable cash. However, warned the FDIC, lenders' hypercompetitive efforts to originate greater volumes of HELOCs -- with looser underwriting standards and more generous loan terms -- could cause "loan performance to deteriorate." In blunt terms, the FDIC said it is worried that higher numbers of credit line borrowers could slip into delinquency on their payments if market interest rates continue to rise and home value appreciation rates level off or decline, as is inevitable in some markets. Already "subprime" HELOC homeowners with below-average credit scores are registering a 5.43 percent delinquency rate on their outstanding lines, and "rising interest rates may push this (number) higher," said the FDIC. Increasingly attractive credit line terms are also pulling in vast numbers of homeowners into HELOCs who never used equity financing in the past. Among the loan features cited by the FDIC: * Automatic upward adjustments in credit line limits as home equity grows year by year. Some banks offer programs that raise borrowers limits based solely on increases in home price indexes for their local markets, or online annual "automated valuations" of the property that involve no direct inspection or human evaluation of the property. Other lenders offer 100 percent combined loan-to-value programs (first and second liens), essentially allowing consumers to borrow as high as 100 percent of their home equity. * Interest-only payment terms, allowing homeowners to avoid principal reduction and pay only interest until a set date for a balloon repayment, years down the road. The FDIC also expressed concern about rising drawdown rates against credit line maximums, which hit 48.3 percent earlier this year, up substantially from earlier periods. "Utilization (of the available credit limit) is an important metric for lenders to watch," cautioned the FDIC, "because a rise could indicate that consumers are drawing more on (their) HELOC for spendable cash and are in a weaker position" to repay. The FDIC's red flags came in the wake of the release of other federal data reporting that aggregate mortgage debt now stands at 72 percent of total household debt -- an all-time high -- and that home price appreciation went off the historical charts in select markets last year, ranging as high as 42 percent in Las Vegas. realtytimes.com

To: RodgerRafter who wrote (18675)	12/15/2004 6:18:42 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Japan borrows Y5 trln at zero rate at FB auction Wed Dec 15, 2004 03:01 AM ET TOKYO, Dec 15 (Reuters) - Japan's Finance Ministry raised 5 trillion yen ($47.5 billion) at an interest rate of zero when it auctioned three-month finance bills (FBs) on Wednesday, highlighting the excess liquidity flooding the banking system. Even in a country that has become accustomed to razor-thin interest rates due to a sluggish economy, it was the first time the ministry was able to sell all of the discount bills at a price of 100.00, or a yield of exactly zero, at an auction. Although Japan's government debt is rated A2 by Moody's Investors Service and AA- by Standard and Poor's, FBs are considered one of the safest places to park money and investors snap them up because of excess liquidity resulting from the Bank of Japan's ultra-easy monetary policy, analysts said. "With the BOJ leaving the money market awash with funds, in a way it's natural and can be seen as an extreme example of the consequence of the easy policy," said Susumu Kato, chief fixed-income strategist at Lehman Brothers. Besides receding expectations of a BOJ policy tightening anytime soon, analysts said the year-end factor was partly to blame for the unprecedented auction results. The three-month FBs will mature on March 28, returning money to investors just before the March 31 fiscal year-end. In all, 2,295.49148 trillion yen ($21,790 billion) in bids were submitted for the auction, the second largest amount of bids on record. A total of 5.00792 trillion yen worth was sold. Analysts expected FB prices to drop back below 100 yen in coming auctions, particularly debt with longer maturities, and warned about the risk of holding such securities with no margin against losses. "I don't think this will spread to longer-term money market instruments like six-month treasury bills, but it does entail the risk of a sharp correction when interest rates start to climb," Lehman's Kato said. Analysts also warned that the cheap fund-raising is spoiling the government, whose debt relative to the size of the economy is already the largest in the industrial world. When interest rates rise, the government will not be able to roll over its ballooning debt at zero cost. Even though weak economic figures of late rule out an imminent BOJ policy tightening, the central bank should at least start discussing ways to normalise Japan's interest rate structure, analysts said. "The current ultra-easy policy was adopted to avert a financial crisis, and now that the risk of a financial system meltdown is abating the BOJ should think of ways to remove this extraordinary situation in the money market," said Izuru Kato, chief economist at Totan Research. Under the "quantitative easing" policy, the BOJ floods the banking system with excess liquidity, making sure the amount of surplus that ends up in banks' current account deposits at the central bank is between 30 trillion and 35 trillion yen -- well above the legally required reserves of about 5 trillion yen. The BOJ has pledged to continue this policy framework until the core consumer price index stabilises above zero. ($1=105.32 Yen)

To: RodgerRafter who wrote (18675)	12/15/2004 6:31:41 PM
From: Raymond Duray	Respond to of 116555

Re: I'm a Fed conspiracy theorist at heart, and believe the Fed has caused many booms and busts by design, but sometimes I wonder if the plan this time is to just keep stimulating until the best assets of the US have been plundered One need not be a conspiracy theorist to understand that the Fed has caused booms and busts on demand. One merely needs to be aware of history. I'm afraid that your scenario for plunder does appear to have some validity. Some of us have noticed that plundering the American taxpayer has been great sport for the likes of Halliburton, Custer-Battles, Giuliani Partners, Newbridge Partners, Bechtel, General Dynamics, Raytheon and a few others since 2001. So plundering is certainly not out of the question at the Fed. Keep in mind though that one of the key goals of Grover Norquist (and Grover does have Dubya's ear) is to create conjoined and insurmountable budget deficit and public debt crises in order to kill off the Federal Government's social programs. Dubya will really want to accomplish this before the end of 2007. This cake is baking. *** "The only thing that is new in life is the history you haven't read." --President Harry Truman

To: RodgerRafter who wrote (18675)	12/15/2004 6:44:03 PM
From: mishedlo	Read Replies (3) \| Respond to of 116555

Japan's Finance Ministry raised 5 trillion yen ($47.5 billion) at an interest rate of zero when it auctioned three-month finance bills (FBs) on Wednesday, highlighting the excess liquidity flooding the banking system. Someone tell me who the F would buy these? Why? To gamble in a rising stock market? To "invest" in US$? To buy gold? Mish

To: RodgerRafter who wrote (18675)	12/16/2004 5:18:49 AM
From: zonder	Respond to of 116555

how the Fed has essentiallly gone back to easy money by pushing the interventions out to the longer maturities. At least they are going something about bringing negative real short term rates closer to "neutral", and that is a move away from easy money. Naturally, they need to go easy on the longer term maturities, the housing bubble they nursed implode, taking all those families indebted to their eyeballs with it. believe the Fed has caused many booms and busts by design What is the job of the Fed? "The job of the Federal Reserve is to take away the punch bowl just when the party starts getting interesting" Federal Reserve Chairman (1951-1970) William McChesney Martin :-) More seriously, I agree with you - It did, and probably more out of incompetence than anything. Quite possibly, no man is "competent" for the job of managing something as complex as "the economy" only by looking in the rear view mirror. Greenspan less so than most, imho, in his post-Ayn Rand days of a soft-money easy-credit interventionist. He will go down in history just like the 1920s Fed he criticised back in 1967.