[LA_Renter]

“This is why the less desirable areas go down first. The more desirable areas only APPEAR to be “immune”. When, in reality, they are just lagging the less desirable areas.”

I think LA is more guilty of this right now than anywhere in So Cal. Good insight about the encroach starting out in the boonies. I agree that what is occurring in the Inland Empire right now is a very ominous sign for LA/OC. We are just starting to see the layers of denial begin to crack in the desirable areas.

[LA_Renter]

Indymac 1Q Profit Shrinks 34 Percent

http://biz.yahoo.com/ap/070426/earns_indymac.html?.v=1

[LA_Renter]

Here is part three of a Chris Thornberg lecture given in November 2006. I think Chris has nailed our current situtation in housing and its relationship to the economy. I think he is extremely conservative on its consequences. The one point that he makes in this segement that stands out to me is that economist, and you can throw in Wall Street for that matter are totally underestimating the sheer size of this housing bubble. They have not budgeted accordingly its impact on GDP. Looking at the stock market right now is like looking at Bizarro World. One of the reasons for this bull run is because Wall Street is totally underestimating the impact of the housing downturn. Another reason is the “global glut of liqudity” needs some place to go. This is a momentum play. IMO we will be in a recession by year end or 0% growth. Don’t be fooled by what seems to be pleasant changes of a falling dollar. Remember the downside of the dollar is that it makes it more difficult for US companies to expand. Also prices of products we import go up fueling more inflation.

[LA_Renter]

Is that what you are seeing sdrealtor??

[LA_Renter]

& our U.S. agenda being “continue devaluing the mighty $ to keep our debs cheap & exports up”.

I really hope that is not true. There is this little thing called inflation that would more than offset any advantages of that strategy. Once the jeanie gets out of that bottle we have some real problems. But that is the way I am playing this thing. I have a 30% in international funds and my domestic stocks are tied to international growth. I have a stock plan with my company that is headquartered here in the USA but is getting exponential growth overseas. It’s a 2.5 bagger from 2005 and still going up. I have to admit I’m in the “I love looking at my 401k” mindset right now. But the weakening US dollar doesn’t sit to well with me. This is like a big shell game. Stock market goes up, dollar goes down.

[LA_Renter]

The thing that I see happening right now that can concretely impact the last vestiges of the Boom emotions are the magnitude of the loan resets occuring right now. The subprime implosion got people’s attention and then they shook it off, “what, its contained”, now we are seeing the astronomical rise in NOD’s and foreclosures. Once people truly see the scope of this foreclosure story the psychology will shift. That WILL happen in 2007. California WILL have reached all time foreclosure highs this year with much more to go. It will be bandied about in the media all year along with further talk of some sort of bailout. There WILL be some degree of panic for people that bought near the top and know they can’t make the loan reset without a higher home price. That dynamic will happen from the bottom to the top of the market. Of course this is IMHO.

[LA_Renter]

HereWeGo,

This is what seems to be the dynamic

“Despite a myriad of potential pitfalls facing the market, as we have noted in the past, overly large short selling creates a bid beneath the market. When grateful shorts cover, they prevent any downside momentum from developing.”

I think what also happens is that when the large money managers see the short interest grow, primarily from retail shorts, they throw money in and create a short squeeze. I’ve said this before but it looks like Shamu’s eating baby seals. IMO the market will return to fundamentals but not until these money managers rake as much money out of it as they can. Friday was options expiry and look what happened. Also the market really isn’t that strong when Gold is pushing $700 and the US dollar is at a 15 year low. Something ain’t quite right here.

[LA_Renter]

TOO MANY SHORTS

I found this on The Big Picture.

“No wonder China’s 4.5% correction had so little impact here: There are a record number of bearish bets made on the NYSE.

We had mentioned back in October that the then record-setting short interest on the Nasdaq was precluding a major correction from occurring.

Today, we see a similar record setting short selling having the same impact — only this time, it is on the NYSE instead. From this morning’s WSJ:

“Short-selling activity jumped to another record on the New York Stock Exchange despite the tepid returns that such bearish bets have garnered so far this year.

For the monthly period ended April 13, the number of short-selling positions not yet closed out at the New York Stock Exchange — so-called short interest — leapt 4.6% to 10,989,496,813 shares from 10,510,404,017 shares in mid-March.

Market-wide, the short ratio, or number of days’ average volume represented by the outstanding short positions at the exchange, fell to 6.1 from 6.2.”

Despite a myriad of potential pitfalls facing the market, as we have noted in the past, overly large short selling creates a bid beneath the market. When grateful shorts cover, they prevent any downside momentum from developing.

If part of your thesis is investing due to “variant perception” — the belief that you have figured out something the rest of the investment community hasn’t — then statistically speaking, the short side isn’t really the ideal place to be when short interest is at record highs.

At that point, shorting is more akin to consensus investing, going along with crowd. Even if you do so independently . . . ”

I guess we are seeing a general market Short Squeeze. This is becoming Surreal. This stock market does not reflect reality, well at least more so than usual. It looks to me somebody or some group is playing with fire next to an ammunition depot. They better be careful. I really hope they don’t think they can print their way out of this mess.

[LA_Renter]

“Mortgage servicers should seek to modify the terms of subprime loans before their interest rates are reset higher and set aside dedicated resources and staff to help those borrowers, according to the document.

Fannie Mae and Freddie Mac should work with lenders to make credit available to borrowers who have trouble refinancing out of subprime loans, the document added.

After the conference, Freddie Mac promised $20 billion in new financing to help subprime borrowers stay in their homes.”

Yep, that should fix it. LOL

[LA_Renter]

DCarlso1,

You do not know one person on this board. You have made a litany of assumptions that only you made up. You don’t know me. You know nothing of the risk I or anyone on this board has taken or of the successes that we have had. You sir are belligerent.

To everyone else
I know, I know……Dont feed the trolls

[LA_Renter]

DCarlso1,

PLEASE!!!

[LA_Renter]

IMO the missing piece of the puzzle is the answer to “are we going into a recession?” Think about it, this is getting ugly fast in an OK economy, what does this look like when and if we have negative job growth?? Take it from someone who knows, it is very difficult to replace a six figure income when you are laid off in a soft job market. I get chest pains thinking about that experience. Thats what will hit the nice areas. The people who bought at near peak prices are stretched as far as they can possibly stretch. One job loss in a two income household and that’s pretty much it. I don’t know if this will happen but it is starting to look like San Diego will lead the country into the next economic downturn. You cannot have RECORD BREAKING NOD’s and foreclosures and have the economy unscathed. Point being don’t be surprised to see the housing downturn speed up in ALL areas. IMHO

[LA_Renter]

Do you have a link?

[LA_Renter]

Front Page Washington Post

http://www.washingtonpost.com/wp-dyn/content/article/2007/04/09/AR2007040901463.html?hpid=topnews

Last two paragraphs

In national surveys, Georgia has been identified as a fraud hot spot. But Fulmer says that is because people there have become so aggressive about identifying the problem. She says she wonders how many homeowners across the country bought in neighborhoods where values were driven up by fraud but don’t know it yet.

“It happens everywhere and anywhere,” said Fulmer, who is now vice president of Interthinx, an anti-mortgage-fraud company. “If the true scope was discovered, I think it would cause a major crisis.”

Also Bloomberg is running a series on the subprime – Alt-A mess. This is not going to end well.

[LA_Renter]

It looks like this thing is spreading all over the place.

“American Home Mortgage Investment Sees Lower 1Q, Full-Year Earnings

MELVILLE, N.Y. (AP) — Mortgage lender American Home Mortgage Investment Corp. said Friday it expects lower first-quarter and full-year earnings due to secondary mortgage and mortgage-backed securities markets conditions.

“These markets were characterized by far (fewer) buyers offering materially lower prices, both for loan pools and for ‘AA,’ ‘A,’ ‘BBB’ and residual mortgage securities. These changes had a significant, adverse impact on our company’s first-quarter results, reducing our gain on sale revenue and causing mark-to-market losses in our portfolio,” Chairman and Chief Executive Michael Strauss said in a statement.

The company sees first-quarter net income of 40 cents to 60 cents per share. In January, American Home forecast quarterly earnings coming in 9 percent to 15 percent higher than prior-year results of $1.02 per share.

Analysts surveyed by Thomson Financial estimate profit of $1.06 per share.

American Home assumes current market conditions will persist, resulting in a lower full-year outlook.

The company now anticipates full-year earnings between $3.75 and $4.25 per share. It previously predicted net income of $5.40 to $5.70 per share.

Analyst consensus estimates put full-year profit at $5 per share.

The company will reduce its quarterly dividend to 70 cents per share because of the reduced first-quarter and full-year outlooks. The new policy applies to the second-quarter dividend payable in July. American Home raised its quarterly dividend by 6 cents to $1.12 in January.

Some of American Home’s business comes from subprime mortgage loans, but its main focus is on the prime mortgage market.”

The interesting thing about this is what they said about the A paper loans.

“In particular, these markets were characterized by far few buyers offering materially lower prices, both for loan pools and for “AA”, “A”, “BBB” and residual mortgage securities”

This is getting interesting.

[Author]

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