Thursday, November 30, 2006

CME Housing Futures Update

looks like an accelaration ..... / sieht nach ner beschleunigung aus.........

dank geht an

S&P/Case-Shiller recently released their September home price data. Since the CME now trades futures based on the S&P/Case-Shiller home price indices, we looked to see what the February, May and August 2007 futures are forecasting. The table below shows the expected percent change in single family home prices in the ten cities that Case-Shiller tracks as well as a composite for the entire country. The change is calculated from the most recent September actual data (the data lags two months) to the 2007 months when the futures contracts expire.

Labels: ,

with innovation comes risk./ pimco!

what a great summary from pimco! and the key to understand the markets more on this topic
super zusammenfassung! und der schlüssel zum verständnis der märkte. mehr zum thema

dank geht an tweedle-dee und ben

U.S. Credit Perspectives / Credit Innovation and Opportunities market innovation has shifted the status quo for individuals and corporations. Thanks to new products in the mortgage and credit markets, homebuyers and corporations can access capital like never before. And with the global economy growing and default rates at historically low levels, investors have been ready and willing to provide that capital.

However, with innovation comes risk. Uncharted waters have not yet been tested during turbulent times. If the U.S. economy slows sharply, today’s healthy risk appetites could quickly wither. Most likely, a deceleration in the economy will diminish the availability of capital, increase volatility, and apply downward pressure on asset prices by raising risk premiums in credit markets from today’s historically low levels.

Innovations in the Mortgage Market
Innovations in the mortgage industry have made it easier than ever for homebuyers to acquire real estate. The home ownership rate in the United States today is at 69%, up 5% in the last 10 years industry’s ability to develop new products that keep initial monthly payments low, enabling consumers to buy homes they could not otherwise afford,(yes they can not afford this kind of houses!)....... Last year, ARMs represented 31.4% of total mortgage originations whereas in 2001 ARMs contributed only 10.2%1. Other examples of new mortgage products include mortgages with maturities up to 40 years, low or no down payments, reverse mortgages, and introductory teaser-rates. Creative financing kept housing accessible despite rising short-term interest rates.

....... Consequently, due to innovation, disintermediation and leverage, housing prices have appreciated significantly faster than nominal GDP growth over the past several years

Ironically, despite a significant slowdown in housing price appreciation and soaring inventories2, credit availability for home buyers is only just beginning to tighten. Why? Investors remain focused on low default rates. In addition, abundant global liquidity continues to flow into the credit markets.....

Nevertheless, innovations in the mortgage market have brought a new and growing class of buyers, including sub-prime, adjustable-rate, and speculative borrowers, into the housing market. In all likelihood, these new players contributed to the rapid appreciation in the housing market over the past several years. However, if delinquencies and foreclosures rise, the prevalence of these marginal players will probably reduce risk tolerances. How the cooling housing market will impact the overall economy is still unclear.

What does seem clear to us is that the tightening of credit for homebuyers we are beginning to see is just that: the beginning. If we are correct, it follows that the influence of leverage and innovation on the housing market will turn and asset prices will be challenged.

Innovations in the Credit Market
As new mortgage products transformed credit availability for homebuyers, credit market innovations have also influenced corporate bond spreads. Credit default swaps (CDS) have grown such that the notional value of all outstanding CDS is now three times larger than the cash corporate bond market (Chart 3). As a result of growing liquidity in the CDS market, corporate bond collateralized debt obligations (CDOs) are increasingly replaced by synthetic CDOs, which are funded with CDS contracts as opposed to cash bonds. ....... Placated by historically low default rates, investors are now comfortable taking on more structured credit risk......

Does credit innovation carry risks? Yes. As we have seen with housing, new home buyers can be lured into buying homes they cannot afford. Ultimately, rising defaults and restricted credit availability will negatively affect the housing market, foreshadowing what is also in store for the credit market. ......... These products (cds, cdo´s, cpdo´s....) and markets are relatively new and, more importantly, have yet to be tested in a bear market. Leverage has been pushed to the point that corporate bonds, and particularly CDS securities, may have limited upside potential going forward. In fact, the explosive growth in leveraged structured credit products globally is likely a main catalyst behind the dramatic tightening in the major U.S. and European credit default indices (CDX and iTraxx) where credit spreads have now reached new tights (Chart 5). We are clearly in uncharted waters.

rest is tied to their tradingstrategies of bonds and derivatives........

Labels: , , ,

another bearish statistic

havn´t heard of this indicator. but it makes sense and is one more idicator that the market is ....mot cheap.
but as long as liquidity is that high i think the markets can hang in ....

habe bisher von diesem indikator noch nie was gehört. das in verbindung mit anderen statistiken zeigt aber eindeutig das diser mark nicht ....billig ist. solange aber die liquidität weiter so hoch ist kann das ganze noch weiterlaufen.

dank geht an herb greenberg and kelly wright

Also heard today from Kelley Wright, managing editor of Investment Quality Trends. "While we generally don't engage in forcasting," he said, "there are some troubling trends we are seeing in our internals that we track at IQ Trends.

"First, since 1966, we have tracked the percentage of stocks that make up each of our categories of value; Undervalued, Rising Trends, etc. When the percentage of stocks in our universe that are Undervalued drops below 17%, it has been coincident with major market tops. Currently our Undervalued category represents about 10% of our universe.

"Secondly, the number of stocks that meet our Criteria for Select Blue chip status only totals 300 stocks; significantly off our long-term average of 350 stocks. In fact, the number of stocks that meet our quality parameters has been declining steadily since 2004.

"It will be interesting to see if either of these indicators change their recent trends."

Indeed it will. Thanks for sharing, Kelley.


Palm Springs Land Rush

i can smell huge writedowns from the builders ....... the endgame will be simular to the goldrush.........
kann die abschreibungen riechen........ wird genauso enden wie der goldrausch.........

Palm Springs Land Rush Threatens Future of Desert-Grown Dates

Nov. 29 (Bloomberg) -- Nick Nigosian is cashing in after 35 years working the California date palm farm he inherited from his father. (well done! / gut gemacht )

``It's time to move on,'' said Nigosian, 57, who has already sold off 50 acres (20 hectares) in the Coachella Valley and plans to sell the remaining 80 acres within five to 10 years. ``I am surrounded by homes. I couldn't even farm if I wanted to.'' (hurry ! beeilen!)

The desert surrounding the golf-resort city of Palm Springs is one of the few places in the U.S. where date palms thrive. Yet farmers like Nigosian have discovered that their real potential profit lies in the land beneath the trees, if not the trees themselves as landscaping ornaments to shopping malls and Las Vegas casinos.

``You can make more money putting it in the bank than farming the land,'' said Nigosian. .....

The agency says at least 1,000 acres of date palm groves have been lost since the 1960's. The farms have made way for the housing developments and some 120 golf courses that have become popular in the fast-growing region of Palm Springs, a city of 47,000 about a two-hour drive east of Los Angeles.
``The land prices have grown so exorbitantly,''.... ``For us farm owners it's great, but it's almost just a matter of time when we are going to sell.''

He says he expects the entire palm crop to disappear within 50 years. (wait after the bubble has popped..../ warte ab bis die blase geplatzt ist....)

$150,000 Per Acre
are enticing date farmers with bids of about $150,000 an acre, up from $7,500 a decade ago (1900%), ...... Some land can fetch as much as $400,000 an acre if it is near developed areas, according to Paula Turner, co-owner of Desert Pacific Properties Inc.

``Land prices have increased significantly in the past five years as more and more people are moving into the area,'' said Turner.

Tending by Hand
The growers' decision to sell is made easier by the fact that date farming can't be made more efficient through technology or most mechanization.

``You can't afford to say no,'' said Sullivan of Turco Desert.

Demand from landscapers for the palms has only added to the pressure to sell. A palm tree sold for decoration at a casino or mall parking lot fetches about $1,000, while it would take about 25 years to make that amount by harvesting dates, according to Keck.

Labels: ,

Wednesday, November 29, 2006

new home sales down 25,4% yoy

more on incentives and the revisions

U.S. July, Aug., Sept. new-home sales revised lower (total 64.000)
U.S. new-home sales down 25.4% year-on-year

U.S. Oct. new-home inventory falls 0.7%, 7-month
that is without counting the cancellations .......
U.S. Oct. new-home median price up 2% y-o-y to $248, 500 (back out incentives and its a different picture..)
U.S. Oct. new-home sales fall 3.2% to 1.004 mln pace

Sales fell in three of four regions. They dropped 39 percent in the Northeast, 5.6 percent in the Midwest and 1.7 percent in the South. They rose 3.2 percent in the West.


make sure you see all the graphs from calculated risk!,

paper money


double whammy / $ and housing / layoffs coming fast and furios.....

what a sweet spot... to be in the housing business and have your base outside the us.......... one more piece that shows that the layoffs directly realtet to housing are starting to pick up. the indirect will follow soon. the $ decline will hurt more and more europen stocks. i bet that in 2007 lots of warnings realtet to the $ decline will follow. time to revise the estiamtes down...... one fact that isn´t mentioned very often is that the euro vs yen is also a big problem especially for the german expoertes. the japanese are the main competitor in very importend segments like autos etc.

was für ein "glück".... im us immobiliensektor zu sein und dazu noch ausserhalb der usa beheimatet..........ein beispiel mehr wie die unmittelbaren entlassungen im zusammenhang mit dem immomarkt anfangen merklich zu steigen. die mittelbaren werden sicher demnächst folgen. jede wetter das wir im jahr 2007 besonders von deutschen firmen jede mange warnungen im zusammenhang mit dem $ sehen werden. eine tatsache die nicht so häufig besprochen wird ist das verhältnis euro/yen. besonders die deutschen sind in wichtigen segmenten wie pkw und vor allem dem maschinenbau harte konkurrenten. Wolseley Plc, the world's biggest supplier of plumbing and heating equipment, cut 2,000 U.S. jobs to trim costs amid a housing slowdown. Shares of the company, which reported a jump in European earnings, rose 5.1 percent (off course.....selbstredend.....)

Chief Executive Officer Chip Hornsby said he's begun a ``significant'' savings program after U.S. operating profit declined in the three months to Oct. 31. Headcount at North Carolina-based building-materials unit Stock has been cut by 10 percent to 18,000. Other U.S. divisions fared better, with earnings at plumbing business Ferguson increasing 20 percent.

European operating profit jumped more than 30 percent in the fiscal first quarter, led by a recovery in the U.K. property market, stronger sales in France and the 1.5 billion-euro ($2 billion) purchase of Denmark's DT Group, Wolseley said today.....

Dollar Impact
Quarterly operating profit in the U.S. fell ``slightly'' when translated into British pounds, Wolseley said, crimped by a weaker dollar. In local currency terms it rose 5 percent. The company said in September that it planned to cut U.S. jobs in response to the sharpest housing slump there in 15 years. .......

Labels: ,

bank´s willingness to lend consumer loans

uh oh! this is a great chart that is one more indicator that something is in the making. but i have to admit that as long as all the crazy lbo financing for private equity, isn´t slowing down the markets can hang in this time a bit longer. but when the willingness to lend to private equity and corporate america for their buybacks and takeovers (same for the rest of the world) is ebbing also we will have big problems. (i mean really big....). so watch for sign that deals fell through, increasing riskpremiums etc to judge the health of this main driver for all kinds of assets markets.

with this stat it´s only matter of time..../bei diesen daten nur ne frage der zeit........
U.S. corporate credit quality has been on a 25-year decline toward junk status, with almost half of all companies now rated below investment grade

As of September, junk, or speculative-rated issuers, defined as those rated "BB-plus" or below, stood at a record high of 49 percent, up from 48 percent at the end of 2005 and a low of 28 percent in 1992,

Downgrades and mergers have taken an even higher toll on U.S. nonfinancial, or industrial companies, with 61 percent carrying junk ratings. !!!!!!

ups! finde dieser chart ist ein weitere indikator das hier wirklich ärger droht. ich muß aber zugeben das solange diese wahnsinnsübernahmen durch lbo´s für private equity, finanziert werden der markt durchaus noch ne zeit laufen kann. sollte aber diesem wichtigsten treiber der märkte und den schuldenfinanzierten übernahmen und aktienrückkäufen der saft ausgehen dürften mehr als nur große probleme kommen. also die nächste zeit ganz genau auf evtl. gecancelte deals und höhere risiskoaufschläge achten um einzuschätzen wie es um diesen sektor bestimmt ist.

dank geht an bill cara. rest and more details
Over the past 16 years in the U.S. there have been four periods of equity market shake-outs 1990, 1994, 1998 and 2000 -- but 2000-2002 was the most severe. In the chart below, look at the light blue shaded indication of the banker’s willingness to lend – yes, the turndown periods were clearly 1990, 1994, 1998 and 2000 -- and 2006.


Labels: , , ,

existing home sales

almost every datapoint shows that the trouble is brewing.............../fast jeder fakt zeigt das sich die lage weiter merklich verschlechtert

fineprint from the release:
inventories were increasing and prices falling faster than at any time in history

here are some very good links that cover the topic.

paper money with good region to region summary

calculated risk with great charts

mish with mike morgan!

housingdoom with a good graph


Tuesday, November 28, 2006

looks like the strong $ policy is working......

thank to tim for the image of the economist (from 2004) could be on the next cover too......
make sure you read the story

story to this chart from jeff saut

please note that this chart shows only the inflation adjusted purchasing power and has nothing direct to to with other currencies.thank god the fed is tough on inflation......../bitte bedenken das dieser chart die inflationsbereinigte kaufkraft des $ zeigt und nichts direkt mit anderen währungen zu tun hat. gottseidank ist die fed ja ein harter inflationsbekämpfer

looks like the strong $ policy isn´t working for the us (domestic+overseas)......

sieht so aus als wenn die "politik des starken $" wirkung zeigt (sowohl in der heimat als auch im ausland).........

disclosure: short $, long gold, goldbugs


Monday, November 27, 2006

back to zero..... / zurück auf los....

this was from the end of october/von ende oktober

the S&P 500 has yet to record a 1% one-day decline, and the streak now sits at 75 trading days. The chart below shows that the current streak is now the longest of the bull market and also the longest since way back in 1995

now add almost the whole november to this and you see the magnitude of this run. / nun noch den fast kompletten november dazuaddieren und man sieht wie gewaltig die bewegung war.

until yesterday! it really was about time........ / bis gestern. es wurde aber auc zeit.

no surprise that just last week the investor optimism was the highflying....../ kein überraschung das ausgerechnet letzte woche der anlegeroptimismus neue rekorde erreicht .. ....


Labels: ,

Irish mortgage debt is double European level

more on the "bubble world tour"

dank geht an Mortgage debt in Ireland is increasing at almost three times the EU average and Irish people owe twice as much on their mortgages as their European counterparts, according to new research.

The European Mortgage Federation (EMF), which represents EU lenders, found that mortgage debt in Ireland increased by 28.5 per cent last year, compared to an EU average of 10.7 per cent.

Only Greece and eastern European countries such as the Czech Republic, Estonia, Latvia and Lithuania had higher mortgage debt growth rates than Ireland.

The average amount owed on a mortgage in Ireland per head of population is €24,082, compared to an EU average of €11,184, according to the EMF.The Irish figure was the third highest amount owed in the EU, with only Danish and Dutch people owing more.

Ten years ago, the average Irish person owed just €3,830 on their mortgage. The EMF said that house price growth in Ireland ''outperforms other EU countries'', with house prices increasing by more than 400 per cent between 1991 and 2005 - twice the EU average.

Labels: ,

a lot of room for disappointments / Investors Are Turning Optimistic

only wall street can judge this kind of data and expect more gains...... . the wonderful thing is that that leaves a lot of room for disappointments.......

bei der faktenlage kann wohl nur wall street mehr gewinne erwarten. das positive daran ist das heir sehr vile enttäuschungspotential lauert......

dank geht an mish und sein
.. 59 percent of fund managers now say they believe that the economy next year will remain as strong as it is now or will improve, according to a recent survey by Merrill Lynch. That’s up from 32 percent of fund managers who thought so in October

The percentage of investors who think that the economy is likely to slip into recession, meanwhile, has shrunk to 8 percent from 20 percent last month.

That’s not the whole story. Investors are also growing more bullish about the outlook for corporate profits. Today, half of all domestic fund managers think that earnings will remain steady or improve in the coming 12 months. A similar survey in September showed that only 18 percent felt that way....

IN reality, profits for most S.& P. 500 companies are growing much slower than 9.6 percent this quarter. If you stripped out the financial sector, where a profit surge of 32 percent is expected, corporate earnings would be likely to grow by only 3.1 percent......

remember when you see this kind of data that a lot of the eps growth comes in the form of (often) debt fueled buybacks. the earningsquality isn´t always as good as wall street wants to make us believe.

bedenkt bitte bei betrachtung dieser grafiken das ein großer teil dieser gewinnzuwächse auf (oft) schuldenfinanzierten aktienrückkäufen basiert. die gewinnqualität ist also nicht immer so gut und schön wie wall street gerne unterstellt.

Labels: ,

Sunday, November 26, 2006

Lessons from Ben Graham / hussman

always good to remember the theory of buffets teacher. especially in these times.
immer gut sich die grundlagen von buffets lehrer und vorbild ins gedächnis zu rufen. gerade in diesen zeiten..
..... Among his (grahams) key measures of investment merit included a market price near or below tangible net asset value, and a wide spread between normalized, fully-diluted earnings yields and high-grade bond yields. That spread between earnings yields and corporate bond yields had originally been enormous in the early part of the 20th century, and gradually eroded to nothing by the mid-1980's. Indeed, at this point, Wall Street analysts hasten to accept any excess earnings yield over-and-above the 10-year Treasury yield, even on the basis of “forward operating earnings” as the earmark of a cheap market. Graham would be appalled.

wall street has clearly gone into this direction....../ wall street hat sich die letzten jahre eindeutig in diese richtung entwickelt.......

As it happens, the simple, normalized earnings yield on the S&P 500 has been a remarkably good indicator of subsequent 20-year total returns for the stock market. In the chart below, I take the inverse of the price/peak-earnings ratio as a “normalized” earnings yield. Recall also that peaks in S&P 500 earnings over the past century have been well contained by a 6% annual growth trendline. (Finding that level today is easy. To quote Madge in the Palmolive commercial; “you're soaking in it”). In order to further normalize the earnings yield, I've added the amount of annualized earnings growth that would be required to bring the prevailing peak-earnings figure earnings at any point in time up to that 6% growth trend.

I should add that it would be reasonable to expect the relationship between normalized earnings yields and subsequent market returns to have been affected by variations in the proportion of earnings retained and reinvested, the average rate of return on invested assets, and so forth. Evidently, these variations have not mattered much over the long-term. One might at least expect interest rate fluctuations to have mattered, but remember that a 10-year bond has a duration of just 7-9 years depending on its yield, while the duration of the stock market can fluctuate between just 16 years when yields are very high, to about 60 years (as is presently the case) when yields are very low. Over a 20-year horizon, which is usually about 3-4 complete bull-bear cycles, shorter cyclical variations in interest rates simply wash out.

Suffice it to say that if Graham's emphasis on normalized earnings yields has anything to say about the market here, it is that stocks are priced to deliver very disappointing long-term returns, regardless of short-term speculative (and even cyclical) influences...........

....Graham's investment criteria largely focused on tangible assets, demonstrated (though normalized) earning power, and so forth, with as few assumptions as possible about the future. I can't imagine that he would have looked enthusiastically on the market's current willingness to place a historically rich multiple on record earnings based on record profit margins.........

i wanted to put this chart from one of few german fellows that see the market the way i see it "wörnie" / danke! he is also a fan of hussman.

especially the 2nd. chart that shows the trendline of the earnings is clearly extendet.


Ich habe hier im Tröd mehrfach daruf hingewiesen, dass die Gewinne der S&P 500 Firmen langfristig, das heisst über einen Zeitraum von deutlich mehr als 100 Jahren mit im jahresdurchschnit 6 % gewachsen sind. ( Quelle J.Hussman) Die letzten Jahre war dieses Wachstum weit überdurchschnittlich ! Es ist jetzt natürlich nicht zwingend von einem Gewinneinbruch auszugehen. Aber ein weiter anziehendes Gewinnwachstum setzt natürlich entsprechende wirtschaftliche bzw. konjunkturelle Rahmenbedingungen voraus, die so nicht gegeben zu sein scheinen. Ziemlich wahrscheinlich wird sich das Gewinnwachstum irgendwann in naher Zukunft zumindest wieder dem langjährigen Durchschnitt annähern. (Reversion to the mean) Allein der Verlauf des 'Gewinnkanals' zeigt eine erhöhte Wahrscheinlichkeit für ein sich abschwächendes Gewinnmomentum. Wenn der Gewinnrückgang wie häufig in der Vergangenheit, bis auf oder in die Nähe des vorausgegangene Gewinnmaximums läuft, wären wir mit einem SPX Gewinn von sagen wir 52 USD (SPX Earnings 2000) bei heutigen Kursen bei einem KGV von 28. Das ist jetzt natürlich auch 'Spinnerei' bzw. im Nebel stochern. Aber mindestens so wahrscheinlich wie die bullische Unterstellung weiter steigender Gewinn bei sich gleichzeitig abschwächender Konjunktur

Labels: , ,

private equity and hotelinvestments

more proof that private equity rules all kind of assetmarkets. for now...........

ein beleg mehr das private equity die treibende kraft in fast jeder anlageklasse ist. noch.....


aus der financial times (german)

i try to translate the highlights from the financial times article: graph shows the main points

in the last 2 years private equity (who else, have heard this before...) have discovered the market for hotelproperties. gb, france and italy are the main targets.

in the first 6 month of 2006 hotelproperties with a value of 12.2 b$ changed hands. this is on top of the 2005 record with 21.5 b$. for the whole year 2006 a new record with 26.2 b$ is expected.

the main portion of the sales comes from portfoliosales and only a smaller fraction from single deals.

55% of the portfolio deals were made in gb, mainly london.

the crossborderdeals are increasing. in 2002 the domestic buyers acounted for 76% of the deals. in the first half 2006 they acounted only for 39%.

Labels: ,

Monopoly money / reits / economist

when i read stories where someone buys assets at peak prices that are yielding less than a risk free treasury with the rational that in the future the yield will pick up for sure to make investments work i´m sure this will end ugly.

wann immer ich geschichten wie diese höre wo zu toppreisen ein wert erworben wird wo die zugrundeliegende rendite unter der risikofreier staatsanleihen liegt und winzig und allein die zukünftige positive renditeerwartung das ganze profitabel macht bin ich sicher das die geschichte übel enden wird.

i wonder why they havn´t figuered out this concept...or maybe the have..... :-)
ich wundere mich warum die noch nicht auf diese idee gekommen sind.. oder sind sie..... :-)

The game of commercial-property investment has gone global

THE barbarians are at reception. No longer are private-equity firms attempting merely to turn round ailing industrial giants. This week, the Blackstone Group bid $36 billion, including debt, for Equity Office Properties Trust, America's biggest owner of office buildings. In nominal terms, it was the largest buy-out ever.

The deal showed that the commercial-property market remains piping hot, even as housing shivers. According to David Harris of Lehman Brothers, the Blackstone deal is just the latest “privatisation” of the American property market, a trend that has seen 22 companies worth more than $100 billion disappear from public ownership since the start of last year.

Such companies look ideal from the point of view of buy-out groups. Today's property barons can borrow against the value of the assets and use the cashflow from rental income to meet the interest payments. With property values rising fast in some sectors (the American office sector has returned 38% to date this year), they can afford to strike the deals above their stated asset value. (really?, why?, this kind of justification and calculation shows the bubblementality/wirklich ?wieso? diese art der agumentation zeigt klare tendenzen von blasenrethorik)

this is a chart of the overall reitindex (not only offices)

This Monopoly-like craze is not confined to America. Just as bonds and shares are freely traded across borders, property is now a global asset too. According to Jones Lang Lasalle, an estate agent, cross-border property investment in the first half of this year hit $290 billion, a 30% increase on the same period in 2005. International deals now comprise 44% of the volume of sales.(read this story from singapore )

In the process, once-obscure markets have been swept into the mainstream. In 2004-05, the new entrants into the European Union benefited from the “convergence” trend as investors took advantage of high property yields. As yields fell, the same money that chased Warsaw office buildings began looking at Sofia warehouses, betting on Bulgaria's entry into the EU in 2007.

This is really all part of the same “search for yield” that has seen investors pile into other high-income assets, such as corporate bonds and emerging-market debt. Andrew Jackson of Standard Life Investments, a British fund-management company, says office yields in China have fallen from 12-13% a couple of years ago to 8% today. The gap between yields on the highest-quality properties and the second-tier sites has narrowed everywhere. (in china you have a good chance that the rising currency will save or compensate the rentyield/zumindest kann man in china ziemlich sicher sein das die steigende währung die mietrendite aufpeppt)

Property is a hybrid asset. It offers a high yield, giving it bond-like characteristics. But like shares (and unlike bonds), investors can expect that income to grow, at least in line with inflation.

Enthusiasm for the sector waned in the 1980s and 1990s thanks to fat stockmarket returns. Pension funds, however, are now desperate to diversify from shares and bonds, and property is benefiting from the same inflows that are boosting hedge funds and commodities. The catch—and it is a serious one—is the lack of liquidity. It takes time to buy and sell a building, and recruiting and managing tenants involves a lot of hassle.

So the key to the globalisation of the property market has been the growth of the REIT, or real-estate investment trust. These are stockmarket-quoted companies that bundle together portfolios of buildings, allowing investors to buy and sell whenever they wish. REITS have existed in America for decades but in recent years they have spread into new markets, such as Japan and Hong Kong. From January they will be available in Britain.(and also germany, in germany the reits will exclude rentals/auch in deutschland. besonderheit, ausgenommen mietwohnungen)

As the market develops, investing is becoming more sophisticated. A joint venture between GFI Group, a broker, and CB Richard Ellis, an estate agent, has introduced derivatives on property indices in America, Europe and Hong Kong, allowing investors to hedge their portfolios and to bet on falling prices. ( we go again, the maybe "false" security against declines..../schon wieder derivate die einem die evtlk. "falsche" sicherheit gegen wertverfall geben....)

Not that prices are falling at the moment. The National Association of Real Estate Investment Trusts says its All-REITS index has quadrupled since the start of the decade. Of the 15 national markets monitored by IPD, a data provider, 12 achieved double-digit returns last year.

In the process, valuations now look toppy. Yields on the most commonly held American REITS are lower than those on treasury bonds, while prime British properties yield less than gilts. In both cases, enthusiasts say there is no need to worry since rents are set to rise, bringing the prospect of higher yields. (read this twice!!!!/doppelt lesen)

the above cahrt is from am must read about reits from mike larson
the other chart shows you the situation in london

Relying on prospective valuations is exactly what stockmarket investors were forced to do in the late 1990s. And it is worth recalling that previous surges of cross-border property investment (Japan in the 1980s, for instance) did not end well. But the peak in commercial property is probably at least a year away—the barbarians still have huge war chests. (i think we saw the in the us with this 36b$ buyout where some smart investors like zell bailed out/ denke in den usa hat der 36b$ buyout den paek markiert. einiger der cleversten investoren wie zell haben abkassiert)

Labels: , , ,

Saturday, November 25, 2006

satire / Minyanville DataWatch: Where Does the Money Go?

a little bit of funny stuff for the weekend. ein bißchen was lustiges zum wochenende

dank an die großartige seite von

In the third quarter of 2006 more homeowners completed "cash-out" refinancings than in any quarter since 1990. So, what are folks spending all that new cash on? Minyanville's DataWatch found out:

i hope its satire....... :-)!!

Labels: , ,

dow vs. inflation and gold / no records in sight

the first one is the chart that looks very impressive and is always shown in the media and from wall street to suggest that stocks are at new records. the fact that nominal records must be put in perspektive (here gold plus inflation). this is even more importend when you come from outside the us and have to factor in currency swings..... this year the nominal dow gain from around 13% translates only in a 6% gain for a european investor/chart dow vs euro subtract the inflation and......

auf den ersten blick wirken die in den medien gezeigten charts des dow und co immer sehr eindrucksvoll und suggerieren das aktien in der tat auf neuen rekorshöhen sind. das ganze ergibt allerdings erst dann einen sinn wenn man sich von den nominellen rekorden nicht blenden läßt und das ganze im relation zu inflation und indiesem falle gold ansieht. von rekorden da weit und breit keine spur.....für investoren von ausserhalb der usa sieht das ganze unter berücksichtigung der währungsschwankungen (zuletzt ja nur in eine richtung.... ) noch weniger lukrativ aus. der diesjährige anstieg des dow von 13% ergibt unetrm strich für nen europäischen investor 6% zieht davon noch die inflation ab und.....


dank geht an
For some long-term perspective, today's chart illustrates the Dow adjusted for inflation since 1925. There are several points of interest. For one, when adjusted for inflation, the bear market that concluded in the early 1980s was almost as severe as the one that concluded in the early 1930s.

It is also interesting to note that the inflation-adjusted Dow is now a touch less than three times higher than where was in 1929 and a little over double where it was in 1965. !!!!!!!!!!

Not that spectacular of a performance considering the time frames involved. However, the magnitude of the bull market of 1982 to 1999 (even when adjusted for inflation) was truly of historic proportions. While the Dow has recently been making new record highs on a non-inflation-adjusted basis, today's chart does illustrate that on an inflation-adjusted basis the Dow still trades below its 1999 peak. Further proof that time is money.

to add on this it looks even poorer whne oyu look at the dow vs gold chart /noch weniger imponierend sieht das ganze beim vergleich zu gold aus.

disclosure: short $, long gold, long goldbugs

update: make sure you read the comments to this great charts from brett steenbarger

Labels: ,

Friday, November 24, 2006

us$ index / do fundamentals matter (in the end..) ?

the weakness in the $chart is really an importend issue. further weakness will reverse the carry trade and force the fed to hold on longer to higher rates. one wild card are the commodities. when they will rise in the face of a weakining $ the troubles gets even uglier. the other importend point will be the demand from foreigners for all the us assets (mainly us debt / treasuries and corporate).

the market is also testing the importend bottom in the 10 years around 4,54-4,55

die schwäche im $chart ist wirklich nicht zu unterschätzen. weitere schwäche im $ dürfte die fed dazu verleiten länger an höheren zinsen festzuhalten als evtl. angemessen. fraglich auch wie sich die rohstoffe verhalten. in der vergangenheit sind diese bei einem schwachen $ gestiegen. zusätzlich dürfte es entscheidend sein inwieweit die ausländer immer noch gewillt sind us anleihen (égal ob vom staat oder unternehmen) zu erwerben. zudem könnte sich der carry trade umkehren.

der markt testet heute zudem die extrem wichtige markierung der 10 jahresbonds bei 4,54/4,55

dank geht an clive maund. more long term charts


some of the problems are:


Labels: ,


was off the last few days because of a hefty flu.

this chart shows you how complacent the markets are. almost no fear. that despite the ugly news and speculative element with record debtfueled lbo´s (at peakprices!). combine this with the $ trouble and the possible reverse in the carrytrade and this vix makes not much sense at all.

lag die letzten tage dank ner hartnäckigen grippe flach.

dieser chart zeigt eindrucksvoll wie wenig "angst" im markt z.zt. ist. die preise für absicherungsgeschäfte ist so niedrig wie noch nie. und das obwohl die news doch zunehmend schlchter werden und das spekulative element besonders im bereich der kreditfinanzierten lbo´s oder going ptivate zu sehen ist. kombiniert das mit den pronlemen im $ und dem möglichen austrocken und schlimmer noch umkehr im carrytrade und der vixstand macht nicht sonderlich viel sinn.

VIX Drops Below 10 dank an

The VIX (S&P Volatility Index) closed below 10 yesterday and the day before. This is the first time it has happened since the end of December 1993. While the VIX remained low for a couple more years after dropping below 10 in 1993, volatility did pick up in the months after and the market struggled

more thoughts on the vix from charles hugh smith

Labels: ,

Tuesday, November 21, 2006

is manhatten really different.......?

what will this market do when the wall street bonuses are disapperaing...?

was wird aus diesem markt wenn irgendwann mal die bonuszahlungen von wall street ausfallen........?

Changing Course to Avert a Glut
.....There are currently 28,258 new condominium units either under construction or being planned in Manhattan, ...Of these, 14,430 units are in buildings that have already broken ground, and 13,928 units are in buildings that are being planned. If they are all built, the total will approach the borough’s current stock of 36,000 condo units and will be equivalent to a fifth of Manhattan’s 138,000 co-op units,......

the inventory of unsold Manhattan condos has jumped by more than 70 percent in the last year. As of Oct. 31, Manhattan had 4,115 condos available for sale, compared with 2,381 a year earlier

developers paid an average of $428 a square foot for sites to build on in Manhattan, far higher than the average of $297 a square foot they paid in 2005 or $260 a square foot in 2004. That means developers are going to have to add these high prices to increasing construction costs, making new projects much costlier over all.

In one case, Macklowe Properties paid $655 a square foot for the site of a combination hotel and condominium project at 53rd Street and Madison Avenue. That price doesn’t include construction costs or any other expenses associated with building. Now the developer has decided to put up an office tower instead (ouch!!!!, maybe blackrock will buy it......)

Labels: , ,

Monday, November 20, 2006

massive warning from fifth third bncp

they call it " Balance Sheet Actions". why not just say that they can´t sell some of the mortages that are available for sale. unfortunatly for "fitb" the mbs market isn´t buying all the crap to skyhigh prices anymore. despite they hide the news in " available for sale" it is in fact a writedown. this is a massive warning. (after hours the stock is down a massive...... 2%)

die bank nennet es "Balance Sheet Actions" warum könnt ihr nicht einfach sagen das ihr eure problembehafteten hypotheken nicht mehr wie in den jahren vorher ohne probleme weiterverkaufen könnt. nachdem die ausfallraten explodieren werden höhere prämien verlangt und obendrein noch bereits verkaufte hypotheken müssen tzrückgenommen werden weil z.b. die ersten raten nicht mehr betahlt werden können. in der realität sind das abschreibungen die unter dem punkt " sec. available for sale" cersteckt und anders deklariert werden. das hier ist ne massive warnung von ner bank die ne größe wie die commerzbank hat. (die aktie hat darauf nachbörslich schockierende 2% verloren....)
fitb is taking a fourth-quarter charge of $325 million, or 58 cents a share, in order to reposition its balance sheet (pre tax 500 mio$)

The company expects earnings this year to range between $2.07 and $2.09 per share. Analysts were estimating $2.68 a share.

The Cincinnati company, which has $105.8 billion in assets, says it is selling $11.5 billion in available-for-sale securities, reinvesting $2.8 billion in available-for-sale securities, reducing its wholesale borrowings by $8.7 billion and terminating $1.1 billion of repurchase and reverse repurchase agreements

on top of the "hidden" writedowns is the quality of the remaining portfolio also weakening.
zusätzlich zu den "versteckten" abschreibungen verschlechtert sich die kreditqualität weiter.
Net charge-offs, as a percentage of average loans and leases, are expected to increase to the high 40s to low 50s basis point range. (from 0,37% last quarter and 0,34 in q2 2005, over 20% increase q/q!). (10q filing)

The increase from the third quarter is largely the result of two large commercial charge-offs totaling $11 million, as well as higher consumer losses. Nonperforming assets are expected to increase in the mid- to- high single digits from third quarter levels. Fifth Third does not expect a significant change in the reserve for credit losses as a percentage of total loans and leases during the fourth quarter. (off course not. you have probably put them in the "security for sale"....)

Mortgage Banking
Fourth quarter
net mortgage banking revenues are expected to experience a low 20s percent decline relative to the same quarter last year, and a low teens percentage decline compared to third quarter. The decline in revenue is largely attributable to lower origination volumes and sales and MSR valuation adjustments

Labels: , ,

UK / owner-occupiers and renters

when you look at the charts you really wonder who is left to buyto keep the bubble going....../wenn man sich den chart ansihet fragt man sich wer bei 70% noch nachbleibt um den boom am laufen zu halten........

more on the bubble in uk/mehr zur lage in uk
Of the 25 million homes in the UK, about seven out of 10 are owner-occupied. The number of home owners has risen by more than one million since 1997 alone.

In 1918, eight out of 10 homes were rented privately, compared with one in 10 now. The number of people in social housing has fallen to fewer than two in 10.

Home ownership is lowest in London (58%) and Scotland (67%). The majority of single parents rent their homes.

Most people live in houses, but large numbers of flats are being built. Homes have improved, but more than a quarter are not properly maintained or constructed

Labels: ,

jeff saut / Roger Real Estate, Larry Leverage, Jimmy Junk bond, and the over-leveraged dance continues

what a summary!. great read and very interesting charts!/ tolle zusammenfassung und wirklich klasse charts.

dank geht an jeff saut
......Speaking first to valuations, we have often stated that the best representative index for the average stock is not the S&P 500, but the ValueLine Index. At its peak the median P/E ratio of the ValueLine Index was 20.9x (see chart 1).

Currently its P/E ratio is 18.3x, and while not as expensive as it was at its zenith, it is certainly not “cheap” by historic standards.

Second, as for earnings momentum, if you deduct share repurchases, and seasonally adjust earnings, one finds that earnings momentum has been slowing since 4Q05 and is currently tracking toward mid-single digits.

Third, recent reports leave little doubt that the economy is slowing. Indeed, GDP, capex shipments, ISM, private payrolls, Industrial Production, Existing Home sales, retail sales, et all, have been contracting. The lone stand-out arguing for economic strength remains governmental tax receipts, which continue to record low double-digit growth readings. Plainly that just does not “foot” with the recent 1.6% GDP report.


Other “non-footers” include:

1) a personal U.S. savings rate that appears to have bottomed, implying that Americans are saving more. This is not an unimportant observation, for it can be argued that for every 1% increase in the nation’s savings rate the business sector loses roughly $100 billion in profits;

2) reinforcing point one is a rare event that saw consumer credit actually get paid down in September with a concurrent reduction in bank lending to households during the month of October;

3) that begs the question, “following the Goldman Sachs-induced crash in gasoline prices, which have subsequently rebounded now that the gasoline weighting has been cut from 7.3% to 2.5% in Goldman’s much indexed commodity index, why have the retail stocks held up so well?!;”

4) evidently Amazon (AMZN/$42.55) and Wal-Mart (WMT/$47.50) don’t believe the retail rebound is sustainable since they are cutting their respective capex spending budgets;

5) and why, pray tell, does the U.S. Dollar Index remain amazingly resilient in light of low interest rates and given the fact that China, Russia, the United Arab Emirates, Saudi Arabia, Switzerland, New Zealand, etc. all telegraphed that they are reducing their weightings of U.S. Dollar reserves?;

6) why did the SEC, in mid-October, reduce margin requirements for select investments by hedge funds?;

7) how in the world can “guest workers” sue U.S. companies for under-paying them ( USA Today 11/15/06)?;

8) we could go on, but you get the idea . . .there are a lot of disconnects currently.

Meanwhile, participants have continued to increase their “risk profile,” as seen in the nearby chart from Merrill Lynch (chart 2), with an attendant parabolic rise in the D-J Industrial Average (DJIA). We have seen such parabolic rises before, most recently in gold’s upside blow-off between March and May of this year (we were sellers of gold back then), and historically such moves have tended to end badly. Verily, since the July “lows” the DJIA has truly gone parabolic. Interestingly, of the Dow’s 1500-point gain over those 87 sessions, roughly 1300 points have come during only 12 sessions where the often mentioned “mysterious buyers” showed up in the futures markets. This unnatural sequence has left the DJIA residing at nearly an unprecedented 1000 points above its 200-day moving average (@ 11341 DMA) and well over-bought relative to its MACD and Relative Strength Indicators (RSI)......

The call for this week: We were aggressively bullish at the mid-June trading lows, and currently we are aggressively cautious. While that stance has cost us relative performance points recently, we continue to believe that you should not put in your “Rent-a-Kid” application right here because we think we are well past the hiring stage in this bull phase. Indeed, some of the “kids” are well on their way to going broke, like Armand Amaranth, Roger Real Estate, Larry Leverage, Jimmy Junk bond, and the over-leveraged dance continues. Our ideal trading pattern calls for a trading “top” during this holiday week, leading to a correction into the second week of December, which would set up the fabled year-end rally. Whether this plays or not only time will tell, but we have learned the hard way it is difficult to break the markets “down” during the latter half of December. However, when the markets do break down in December it can be significant . . . hello 2002, which saw the DJIA fall from its December high of 9000 into its March 2003 low of 7400.

Consequently, we find ourselves left with a George Soros quote from the year 2000 – “Maybe I don’t understand the market, but I prefer not to have the same kind of continued exposure I’ve had up until now. In some ways I think the music has stopped only most people are still dancing.” (what a great quote!)

Labels: , , , ,