Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ajtj99 who wrote (9833)	8/14/2008 10:30:21 PM
From: Stoctrash	Respond to of 33421

Ajtj...makes sense to me. Wait until later this year when the new FNM and FRE lending rules hit the books and 80% max LTV kicks in. Bank MTG sales will be even lower no matter the rates. I'm still thinking SRS is buy the dips deal ;..I got stopped out weeks ago after some nice gains.

To: ajtj99 who wrote (9833)	8/15/2008 6:47:20 PM
From: John Pitera	Read Replies (1) \| Respond to of 33421

Pimco's El-Erian Says Raising Bank Capital Is Harder (Update1) By Thomas R. Keene and Daniel Kruger Aug. 15 (Bloomberg) -- Mohamed El-Erian, co-chief executive officer of Pacific Investment Management Co., said it has become harder for financial firms to raise capital because investors such as sovereign wealth funds have gotten ``smarter.'' *``We are in the process of a major adjustment of the banking system* which is made harder because you don't have the capital to lubricate it,'' El-Erian said in an interview from Newport Beach, California, on Bloomberg Radio. Firms including Citigroup Inc., Merrill Lynch & Co. and Barclays Plc have secured investments from the Middle East and Asia to boost capital depleted by credit-related writedowns. Financial institutions worldwide have posted losses and writedowns totaling $502.7 billion since the start of 2007 after the collapse of the U.S. subprime mortgage market roiled credit markets, according to data complied by Bloomberg. Large investors from emerging economies that were eager to invest in U.S. and European financial firms in late 2007 and early 2008, when it was thought improving balance sheets damaged by the credit crisis would take only a one-time investment, have ``realized this is a repeated game,'' he said. Merrill Lynch sold $8.5 billion of stock and liquidated $30.6 billion of money-losing assets on July 28 to shore up its credit rating. Temasek Holdings, the Singaporean government investment fund that bought shares in Merrill last December to become the firm's biggest investor, agreed to buy $3.4 billion of stock in the new offering, Merrill said that day. ``They don't want to get diluted,'' El-Erian said. ``The willingness to provide unconditional capital has declined.'' Falling Banks The 24-member KBW Bank Index has declined 35 percent in the past year. Among index members, Citigroup fell 59 percent to $18.55, Bank of America Corp. dropped 36 percent to $30.70 and Washington Mutual, Inc. plunged 86 percent to $4.55. The U.S. is in the process of delivering three separate sets of balance sheets for financial firms, the housing market and consumers, El-Erian said. A problem that started with delinquent mortgages held by subprime borrowers has been ``morphing into something bigger,'' he said. Most ``domestic institutions reported having tightened their lending standards and terms on all major loan categories over the previous three months,'' the Fed said Aug. 11 in its quarterly Senior Loan Officer Survey. Late payments on subprime mortgages rose to 18.79 percent for the quarter ended March 31, the most since at least 1996, according to the Mortgage Bankers Association in Washington. Delinquencies on all mortgages were at 6.35 percent, the most since at least 1979. The data is the most recent available. The Dollar's Gains Consumers have been pressured by stagnant wages as prices for oil and other commodities rose through the first half of the year, he said. Crude oil had doubled in the past year, reaching $147.27 a barrel last month, before falling to $113.77 today. Crude oil has fallen amid speculation that slowing global growth will reduce demand for byproducts like gasoline, and as the dollar has rallied in the past month. The month-long rally in the dollar is a ``cyclical retracement'' and its decline will eventually resume with Asian currencies carrying ``the burden of appreciation,'' El-Erian said. The U.S. currency is at the strongest level in almost six months against the euro and a seven-month high versus the yen. The Dollar Index traded on the ICE futures market, tracking the greenback against the currencies of six U.S. trading partners, reached 77.268 today, up 7.5 percent since July 15 and at the highest since Jan. 22. `Allowed To' Appreciate ``Currencies move not because they ought to but because they are allowed to,'' El-Erian said. ``Previously rigid currencies are going to become more flexible'' because it is in their own interest. He did not cite any specific currencies. Dropping from an all-time high of 82.30 cents per euro set in October 2000, the dollar lost almost half of its value when it dropped to the record low of $1.6038 last month. El-Erian, 49, rejoined Pimco in December after about two years of running Harvard University's endowment, the world's largest higher-education fund. He guided Harvard's $34.9 billion fund to a 23 percent gain in the fiscal year ended June 2007, adding $5.7 billion in value. Before going to Harvard, El-Erian was a managing director at Pimco from 1999 to 2006 and oversaw the Pimco Emerging Markets Bond Fund. He now shares the position of co-chief investment officer with Bill Gross and is co-CEO with Bill Thompson. To contact the reporters on this story: Thomas R. Keene in New York at tkeene@bloomberg.net; Daniel Kruger in New York at dkruger1@bloomberg.net Last Updated: August 15, 2008 17:28 EDT

To: ajtj99 who wrote (9833)	8/15/2008 6:57:22 PM
From: John Pitera	Read Replies (3) \| Respond to of 33421

I am awestruck by the extreme volatility in the currency, commodity markets and so many other markets. and I'm highly concerned regarding Russia's forray into Georgia, the ultimatum to Poland, and the instability in Pakistan. There are more serious crises that are brewing, are in formation or are currently looking at us squarely in the eye; than we have seen in at least a generation. The credit meltdown, and contraction in credit, coupled with funding costs going higher in this deflationary credit asset bubble contraction -- is so profound as to be beyond words. John