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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Ilaine who wrote (70595)	1/27/2011 4:12:34 PM
From: Cogito Ergo Sum	Read Replies (1) \| Respond to of 218662

Well it sounds like you've done a good job and they have substance :O) Agree on the have/not gap.. Going skiing in the west with son late Feb... when we cone back it will almost be spring !!!!! and time to get the garden planned and some plants started :o).. TBS

To: Ilaine who wrote (70595)	1/29/2011 8:48:05 PM
From: TobagoJack	2 Recommendations Respond to of 218662

just in in-tray From: R Sent: Sun, January 30, 2011 9:45:03 AM Subject: The Waiting Game Continues The Waiting Game Continues Ramsey Su January 2011 I first wrote about the waiting game back in the fall of 2010 (attached). It is time to examine what has changed. Filtering out all the noise such as the weekly mortgage application data, the monthly new and existing home sales, the Case Shiller numbers and housing starts, there has not been any trend setting data. If I am a paid mouth piece, I can easily make a case for whatever my clients want to hear. Instead, I will try to examine the major factors that drive the housing market and try to detect any changes. Conditions have clearly deteriorated. The problem is compounded by propagandistic optimism from Wall Street and Washington. Jobs jobs jobs. If one job is created every time a politician mentioned the word "jobs", we would have a labor shortage by now. Unfortunately, jobs are not created, or saved, just because Obama said so. No jobs, no housing recovery. It is that simple. There had been one exception to this jobs and housing correlation in recent years, and that was during the Greenspan jobless recovery era supported by the toxic loan bubble. We knew how well that ended. I doubted if we are going to repeat that in the near future. Bulls argue that the jobs picture is improving? How so? Reality is with all the deficit reduction plans at all levels of government, either voluntarily or involuntarily, the public sector employment is going to shrink. These are all domestic jobs and decent paying jobs. Just do a news search using "layoffs 2011" and see for yourself. Bulls claim that the private sector is going to replace the public sector. Where? Look at the darlings of Wall Street this year. Apple and Google can double their staff and it would not put a dent in the ranks of the unemployed. The new $50 billion company, Facebook, has about 2000(?) employees? GM came back from the grave and is creating lots and lots of jobs ....... in China. Wall Street is predicting a great year for M&As, which are not exactly job creators. As for grass root small business hiring, just look around your own backyard. I do not see many green shoots. The second most important factor that influences housing is financing. It may or may not be the intent of Ben Bernanke and his QEs but it had provided sole support to the secondary mortgage market, resulting in a non-market based real estate finance structure. With the announcement of QE2 in November, the market reacted negatively and mortgage rates moved about 100 basis points from its QE1 lows before settling at current levels. QE2 is scheduled to end in June. The secondary market is also survived by the Treasury's guarantee of Freddie and Fannie. There is no exit plan at the moment, may be because there is little chance of a positive outcome. If the Treasury terminates the guarantee, all agency loans would have to price in a risk. Rates would go up. If the guarantee is continued, then the cost would be added to the ballooning deficit. As a result of QE1 and the drop in mortgage rates, 2010 was a banner year for refinances. I do not have the final numbers but the Mortgage Bankers Association had been reporting that 70% of all mortgage applications were refinances for most of the year. While I do not think we can compare 2010 to the peak MEW (Mortgage Equity Withdrawal) years, refinancing at a lower rate reduces household expense and should be one of the best stimulus for the economy. With the recent rate increases, refinance activities should shut down when the last few procrastinators are done. That is assuming they still have any reason or equity to refinance. How can the country avoid a double dip recession? CBO last week came up with a jaw dropping $1.48 trillion estimate. Putting this number in perspective, the defense budget for 2010 was only $680 billion. The country can eliminate the entire Department of Defense, end both wars and still would be left with a $800 billion deficit. Our political leaders and policy makers have turned to religion and had been praying for yet another second half recovery. What if there is no recovery? Do we have any ammo left for another round of stimulus before the world say no to the US debt and dollars? During the last quarter of 2010, the foreclosure process had a surprise moratorium - the robo-sign scandal. It delayed foreclosures not only in judicial foreclosure States but also the non-judicial States, as Title Companies figure out how to insure the sales. I have discussed the problems of these pent up foreclosures ad nauseam. The longer the delay, the harder it will be to deal with the consequences. This may be the year. Finally, the Waiting Game is not about waiting for Armageddon, even though I believe the outcome is going to be unpleasant. The system is not stable and unsustainable. It has to get better or it will get worse, status quo is not an option. I am waiting for signs of improvement or, if there are no signs of improvement, what actions our government going to take. I think March is going to be the month to watch. That is when Washington has to address the politically unpopular debt ceiling issue. New home sales should be reporting the results of the spring selling season, which starts after Superbowl. Existing home sales will reflect the higher mortgage rates since QE2. Foreclosures should be breaking the 100k mark unless there is some type of robo-sign 2. States like California would be approaching the last fiscal quarter, when budget deficits will be in the limelight. Plus, who knows what multi colored swans may be lurking around the corner.