I feel like it’s Thanksgiving afternoon, with a feast of stories to chew on today. In no particular order …
* The government is finally going to allow one of these ne’er-do-well financial firms fail, apparently. I’m talking about CIT Group, the commercial lender that’s been struggling for months. Apparently, the Treasury, Federal Reserve and especially the FDIC have denied its request for more aid — which could precipitate a bankruptcy filing as soon as the next couple of days. CIT has lost $3.4 billion over the past eight quarters; it has already received about $2.3 billion in bailout money.
* Initial jobless claims fell to 522,000 from 569,000 in the most recent week. There was a huge drop in continuing claims — from 6.915 million to 6.273 million — but some of that may be seasonal distortions related to the July 4 holiday and auto production shutdowns. The news follows a better-than-expected reading on the Empire manufacturing index for July (-0.6 vs. a forecast of -5) yesterday. Industrial production fell at the slowest pace (-0.4%) in June in eight months, but capacity utilization plunged to a record low of 68%.
* The foreclosure problem continues unabated. RealtyTrac data showed monthly filings climbing 4.6% between May and June to 336,173. That’s just shy of April’s record high (342,038). On a year-over-year basis, filings were up 33.2%. The hardest hit areas are the ones you would expect — parts of California, Florida, and especially Nevada. In Nevada, a whopping 1 in 16 households were hit by at least one kind of filing in the first half of 2009.
* Speaking of foreclosures, we continue to see reports from various media outlets about how difficult it has been for lenders to rework loans, despite prodding from government officials. The Wall Street Journal tackles the topic this morning, focusing on Morgan Stanley’s Saxon Mortgage Services arm. It’s a good read if you have time. And if you’re looking for figures on the size and scope of the problem, the Journal notes the following:
“New foreclosure notices will total 2.4 million this year, which could trigger price drops in 69.5 million nearby homes, estimates the Center for Responsible Lending, a financial-services research and policy firm. At an average decline of $7,200 a house, that translates to a potential drop of $502 billion in total U.S. property values.”
* On the credit front, there’s been a mixture of moderately better and worse news. Credit card trust reports yesterday from the likes of American Express and Capital One showed some improvement in delinquency rates. On the other hand, JPMorgan Chase CEO Jamie Dimon is forecasting worsening commercial real estate market conditions on that firm’s conference call. So I guess the way you interpret the news depends on if you’re an optimist or pessimist. Clearly the stock market has been very optimistic the past few days!
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Recent news article says Bernanke is recruited to explain to Chinese how inflation will be held in check, so they continue buying US debt. “Do you feel lucky? Do you?”
The stock market has been optimistic because it is being manipulated — big time. There is no good news. Continuing UI claims dropped also because people have just plain run out of benefits. I’m out there in the real world, and I know people are suffering and can’t find jobs, even those who are highly educated (with advanced degrees). Also, the Capital One report I read wasn’t really that good when you read beyond the manipulated headliines. Anyone who is an optimist is stupid. Last week we were falling off a cliff, and this week all of a sudden we have “green shoots” again? Give me a break. It seems to me that whenever Obama’s numbers go down and he needs to get through an agenda, all of a sudden the economy is doing better. Funny how that is.
It looks like American loves dream and hope forever.
It sounds like bull, It sounds like strong America.
But in my view, experienced with Japanese lost decade.
Americans(wall street) will 100 % run away, when real bear comes.
Faster and faster.
They looks also like chicken.
Fear and greed forever.
Hallelujah！
My take on recent events.
More slashed (non-financial) revenues/profits, they are bad, but not quite as bad as analyzed, so YEAH! BUY, BUY, BUY. Meanwhile, it should be noted that Goldman Sachs employees are cashing out their own stock at a record pace. Rats fleeing a sinking ship comes to mind.
Unemployment numbers are unadulterated BS. From what I have tried to learn, the Department of Labor is still using pre-auto industry crash (which took place 4 years ago, not last year) employment numbers to “seasonally adjust” the claims numbers. There are more than 200,000 fewer workers, yet we continue to use the old figures to “adjust.”
Also apparent is that many states are denying continued claims for unemployment. Which would explain part of the sudden drop in continuing claims. Add to that the number of “discouraged” workers who have just given up. We will just ignore the fact that a huge percentage of our “workers” WERE “independent contractors” and even though they have NO income, they are not counted amongst the unemployed.
As for CIT, CIT is a HUGE factoring financier for manufacturing. Anyone care to guess the number/amount of GM /Chrysler /Visteon /Delphi /Lear invoices that were dismissed in bankruptcy? The government is INTENTIONALLY bankrupting our small businesses and the CIT bankruptcy is one more nail in the coffin as their biggest customers are the small businesses that are dying on the vine.
And finally, if I could value my inventory, receivables and payables at whatever number I need to to show “profits” then life would be great and Bank of America wouldn’t be calling in a performing loan due to financials.
In the real world, ain’t nothing but green weeds. NO shoots, just weeds destroying everything.