Wednesday, February 28, 2007

U.S. Subprime Auto ABS Indexes Weaker

no surprise that the subprime mess is spreading. to be honest i was surprised that the delinquency rate is still so much lower than in the real estate backed securities (see graph). but i´m pretty sure that this will change very soon. the real job related fall out will lead to a big hit in this segment. and it is no wonder that the "bank´s willingness to make consumer loans" (graph 2)is falling fast......

keine überraschung das die probleme im suprimesegment nicht isoliert bleiben. ich persönlich hätte erwartet das die "problemkredite" deutlich näher an den der immogedeckten hängen (s. grafik). gehe jde wette ein das sich das in ganz naher zukunft ändern und angleichen wird. der negative arbeitsmakteffekt des immogetriebenen abschwungs wird diese jahr eintreten. kein wunder also das die banken in sachen konsumentenkredite ( 2.grafik) rapide fällt......

but i think that gm, ford, chrysler etc have no choice but to lend to everybody with a sell their cars/suv´s

will be interesting to see how long the investors are picking up the auto abs and when/if we will see a similar problems like the ones in the mortgage mbs.

dumm nur das gm, ford, chrysler etc wohl keine andere wahl haben als weiter an jeden noch so schwachen kreditnehmer kredite zu überhaupt noch autos und suv´s zu verkaufen.

spannend bleibt die frage wann und ob der markt genauso implodieren wird wie das mit immobilien hinterlegte mbs segment. (link oben)

thanks to realist and russ winter

NEW YORK, Feb 28, 2007 (BUSINESS WIRE) -- Subprime delinquencies for US auto loans rose 4.1% in January versus December 2006, while the annualized net loss (ANL) index spiked 31.4%, ...

'Approximately 70% of the transactions in the subprime ANL index recorded higher loss levels in January as the index hit its highest level in nearly three years"....

The subprime ANL jumped to 8.67% in January from 6.60% in December 2006, and on a year-over-year basis, the index was 24.2% higher versus January 2006. However, the spike in ANL may have been exaggerated slightly by one subprime issuer included in the index.

This issuer implemented a change in their servicing policy resulting in a spike in their ANL. ...... The subprime delinquency index was at 2.82% in January, slightly higher than the 2.71% recorded in December 2006.

In the prime sector, 60+ days delinquencies were at 0.58% in January, 9.4% higher versus December 2006 and 3.3% lower on a year-over-year basis.

Prime ANL were 0.89% in January, 7.2% higher than in December. This is the highest level the index has hit since February 2006. However, ANL remain down on a year-over-year basis by 17%.

Auto ABS issuance was quite healthy in January with $3.47 billion coming to market in four transactions, namely two subprime, one prime, and one motorcycle loan transaction. Issuance in early-to-mid February was active with over $8.0 billion issued through the first three weeks of February; $12.37 billion was issued in February 2006.

Labels: ,

fantastic jim rogers bloomberg interview!

make sure you see this wonderful interview. rogers on china, housing, recession, resources etc....... fantastic!

click on the headline to start the video

das solltet ihr euch nicht entgehen lassen. rogers streift ziemlich alle relevanten themen. großartig!

bitte auf die überschrift klicken um das video zu starten

Labels: ,

some charts from yesterday.......and some cartoons

i think it is safe to say that this cartoons is now officially outdated.... we have now moved to the sell side.....but i have to wait for cohen, cramer, battapaglia etc to confirm this.............. :-)

denke das dieser cartoon seit gestern ausgedient hat.---- wir sind wohl jetzt zu der verkäuferseite gewechselt... wir hier müssen aber wohl auf all die daueroptimisten speziell auch in der presse warten um das zu bestätigen (kann nicht alle aufzählen).....

i think this one is also outdated.......the bear has entered the stage........

here now the facts: europe and asia have extended their slump today.

i especially like the opinion from bill cara on the sudden drop.

At 3:00pm ET yesterday the Dow 30 index dropped about 200 points in literally seconds. There was commentary in the media that the trade data had fallen behind and that had caught up at that moment.

I believe otherwise.

Having been in the business at a high level, I believe a rational explanation is that margin calls were sent to under-margined accounts during the day. With one hour to go, the broker-dealers would take action by selling out accounts of under-margined clients that had not responded to demands.

here comes the response from dow jones:

System problem caused calculation lag Tuesday

maybe caused from too much liquidation going on....... :-) / evtl. zuviel verkaufsdruck.... :-)

update from

We all know by now that the sudden 200 point drop in the Dow yesterday was due to a calculation delay caused by information overload by Dow Jones' data systems. Below we calculate how the intraday price chart should have looked based on the actual price changes of the Dow's 30 components. As the chart shows, the calculations began to go awry a little after 1:30 pm and continued until the computers finally caught up at 3:00 pm (i leave it to the readers to judge this action.../macht euch selber einen reim darauf......)


this is what to be expected. but i think this time they need to clone van gogh and michelangelo...........

hier kommt wohl was wir jetzt zu erwarten haben. denke aber das dieses mal ne verbindung von van gogh und micheangelo nötig sein wird......

and on top of this the "spin doctors" / dazu wohl auch noch die "spin doctors" :-)

more graphs etc here from barry ritholtz

and mish!

both very good!

Labels: , , ,

Tuesday, February 27, 2007

no worries, loan loss reserves..../minyanville

this questions once more the earnings quality. this will hit the banks very very hard! you can see the impact now in the subprime segment were they went from record profits in 2005 to mid 2006 to record losses in just a 2 quarters. looks like the rainy days are coming back.......don´t get blinded from their low pe and the dividend yield........that´s the same mistake the new, cfi, etc investors were making.

dieses beispiel zeigt einmal mehr wie dürftig es teilweise um die gewinnqualität der banken bestellt ist. wir müssen hier nur zur hypovereinsbank mit den ostimmobilien blicken um zu erahnen was kommen wird. und das komplette subprimesegment ist von rekordgewinnen bis mitte 2006 zu rekordverlusten in nur 6 monaten gekippt. man sollte sich also nicht von den niedrigen kgv´s und divrenditen locken lassen.sieht so aus als wenn die regnerischen tage zurück sind.

That's the headline from today's WSJ on banks keeping less money in reserve.

We've noted the selloff in financials over the past week on the Buzz & Banter, remarking a number of times on the increasing number of technical breakdowns in Banks, Real Estate, Insurance and Finance stocks.

Perhaps this is the reason for the breakdowns in certain financials: over the past few years banks have dramatically lowered the level of their reserves.

Bank reserves are established to handle the percentage of their loan portfolios exposed to potential

According to the Journal article, investors in financials have benefited greatly from the sharp falloff in bank reserve levels since that helps boost profits.

"From 2004 to 2006, the nation's biggest banks received 37% of their earnings growth from reductions in their loan-loss reserves, (WOW!!!!!!!!!!!!!)

Meanwhile, problems building in the subprime lending segment are awakening regulators to the possibility that perhaps banks are overestimating the quality of their loan portfolios.

..., a number of banks have drawn down their reserves for bad loans to "apparently unsustainably low levels."

The common refrain in defense of the current low reserve levels is that banks are more sophisticated at measuring default risk and that current repayment problems are isolated to the weakest segment of borrowers.

Sounds good. Except that, according to the FT, late payments and defaults in the so-called Alt-A market, catering to consumers with slightly better than subprime credit, are running at four times the historical rate.

FT: Treasury prices rose on Monday as fixed income investors sought a safe haven amid fears that repayment problems involving “subprime” US mortgage borrowers could have knock-on effects in the broader $8,000bn mortgage market and beyond.

The latest concerns centre on the Alt-A market, in which consumers with slightly better credit than the weakest subprime borrowers can obtain loans with loose terms - such as no proof of income. Late payments and defaults on such loans are running at four times the historical rate.

“The delinquency numbers for the 2006 Alt-A originations are materially worse than a lot of people would have expected,” said Charles Sorrentino, mortgage analyst at Merrill Lynch.

The annual cost of credit protection on the ABX index of mortgage bonds rated BBB- rose to 14 per cent, up from 13 per cent at the start of the day and just slightly off last week’s record of 15 per cent. Three weeks ago, the price of such protection was 2.5 per cent.(end ft)

We could also point out that late payments and defaults are understated since a "readjustment" of the loan provisions keeps them out of the reporting criteria, but why spoil a solid case of denial?

more on this topic from calculated risk

Labels: , ,

derivatives and accounting

no big story.... but it shows you that when ge has "material weakness" in the accounting of derivatives and hedging positions that the whole derivatives issue is even bigger most thought. just think of the counterpart risk when hedge funds are involved.......

nicht weiter der rede wird, oder doch? zeigt wunderbar das wenn selbst ge massive propleme hat derivate und hedginginstrumente richtig zu verbuchen das die derivateproblematik wohl doch schlimmer als von den meisten erwartet ist. man braucht da nur an die problematik denken wenn hedge fonds der gegenpart der position sind.....

thanks to

We identified the following material weakness in our internal control over financial reporting - we did not have adequately designed procedures to designate each hedged commercial paper transaction with the specificity required by Statement of Financial Accounting Standards 133, Accounting for Derivative Instruments and Hedging Activities, as amended.

Labels: ,

Kass: Short Side Never Looked So Good

wow! waking up today in germany and see the intraday chart of the us markets gives us skeptics and bears reward for almost 3 month of pain. i think with yesterdays "correction" some highly leveraged people are getting really nervous. and they should.

donnerwetter. nachdem ich mir gerade mit einem auge (mit dem anderen beim langlauf) die us intradaycharts angesehen habe denke ich das wir "skeptiker" für fast 3 monate entschädigt worden sind. ich wette das momentan einige hochgehebelte marktteilnehmer nervös werden. und die haben sicher allen grund dazu.

i agree 100% with doug kass and the only difference is that i´m still long gold. i find it funny how they try to blame it on china. almost every markets should have corrected a long tome ago. the fundamentals were worsening day by day. the worse the data the higher the stocks. it´s not china, its the economy stupid!

ich stimme mit doug zu 100% überein. einziger unterschied ist das ich noch immer long im gold bin. besonders lustig wie jetzt alles auf china abgewältzt wird. fakt ist das die märkte bereits vor einigen monaten hätten korrigieren müssen. teilweise hatte man das gefühl je schlechter die news desto besser für die kurse.

just ask cramer. recession is good, subprime meltdwon is good, housingcrash is good (funny because he has never seen a bubble......) his only argument was lower rates! after a recession he prays probably for a depression. this guy is really a clown (i´m too polite to call what he really is...). here are some from cramers worst

fragt mal cramer (die us ausgabe von förtsch, frick etc). der hat sich bis gestern ne fette rezession, einen crash im subprimesektor, einen crash im immobereich (merkwürdig da er die existenz eines bubble nicht erkennen konnte). sein einziges argument war das die fed dann ja die zinsen senken muß. nach der rezession hätte er wohl für die depression gebetet. der typ hat auf cnbc die höchsten einschaltquoten. will ais höflichkeit nicht sagen was ich von solchen typen halte. unter dem link oben ein paar highlights von ihm

I am on the road traveling today, but I wanted to say that on Monday, for the first time since early 2000, I went all in on the short side. That is a reflection of how negative I am about this market.

Despite too often sounding like the boy who cried "wolf" in light of the continued market ascent, I have spent the past several weeks outlining my investment rationale and my major concerns:

heightened debt loads among consumers, the government and hedge funds; rising mortgage credit losses, which will weigh on a spent-up, not pent-up consumer; nascent inflation, seen in rising raw materials spot prices and crude lately; the ever-present specter of geopolitical tensions; and corporate profit and profit margin vulnerability.

thanks to barry ritholtz

Above all, investors are not being paid for risk -- and excessive valuations are not being recognized. As Robert Marcin

pointed out Monday, today's median P/E of 20.5 times trailing earnings of the Value Line composite of 3,000 leading companies compares to 14.5 times at the market's top in the fall of 2000; meanwhile, credit spreads and volatility --expressions of copious complacency -- remain at record low levels.
Today was by far the largest increase (64.22%) in the VIX since 1990

Here are some reasons we're at such a precarious point.

1. Brokerages and money center banks are rolling over badly and remain a negative short-term market tell.

2. Hedge fund net-long invested levels (61%) are at the highest level and the AAII survey has bears at the lowest level since December 2004.

3. The daytrading in the Chinese market has begun to eerily resemble daytrading in the Nasdaq, which peaked seven years ago. (The more things change, the more they are the same, though the location changes.)

4. Virtually every hedge fund has the yen carry trade on its books, and recent signs in the currency markets indicate that the trade is getting less compelling. (If it does begin to unfold, the young hot money -- especially in the emerging markets like China -- could reverse in a nanosecond).

5. Two weeks ago, England's Times of London published a report that Countrywide Financial would be acquired by Bank of America . Again, the shares rose by nearly 10%, though they have subsequently declined by nearly 15% as subprime problems have grown. The outsize reactions to less-than-legitimate sources is typical these days. (despite the crash in the subprime cfc reached almost an all time high!/trotz subprime crash fast ein ath )

6. History shows that four-year extensions of bull markets, out of deep oversolds, often morph into disaster: 1932-36 (1937 crash); 1957-61 (1962 crash); and 1982-86 (1987 crash). We're well into four years in the current stretch.

7. Writing again on history (and technical voodoo), over the last century every decade has seen a market crash/deep correction in the sixth or seventh year of that decade.

Above all, the lifeblood of the bull market is the availability of credit, and the subprime issues (dismissed by most, not surprisingly) are putting a halt to lending that for years has disregarded creditworthiness and plain common sense. As night follows day, personal spending will plunge just at a time when most believe the consumer is invincible.

The opportunities on the short side have never been more attractive, just as the signs of a breakdown of the impressive bull market run have started to appear -- a potentially lethal combination.

can´t wait for abby ....... thanks to

i wanted to add that the latest action in the private equity sector with deals like eop/blackstone and the txu/kkr has shown me that the final stage of the excess is near.

make sure you read what will hopefully mark the peak of leveraged deals,,

mir persönlich haben die letzten transaktionen der private equity firmen mit deals wie eop, txu aber auch hochtief etc gezeigt das nach oben nicht mehr viel steigerung möglich waren. kann jedem raten den wahnsinn und evtl. historischen konditionen der deals oben nachzulesen.

Labels: , , , , , , , ,

Subprime Mortgage Index Tumbles an Eighth Day

now that the fallout is obvious "the blame game" will get started soon....? everybody reading a bubble blog could see this coming fast and furious. amazing that the "smart" (haha) money didn´t see this coming....... just watch aaron "mortgage lender-implode-o-meter" or read some stories under the label.

wann wird der schwarze peter herumgereicht.......? jeder der die letzten monate ein bubble blog gelesen hat wußte das es so kommen würde. erstaunlich das das angebliche "smart" money vollkommen ahnungslos war..... lest einfach unter dem link oben oder under den label um mehr zu erfahren.

Feb. 27 (Bloomberg) -- The perceived risk of owning low- rated subprime mortgage bonds jumped to a record for an eighth straight day, according to an index of credit-default swaps on 20 securities rated BBB- and created in the second half of 2006.

The ABX-HE-BBB- 07-1 index fell 6.3 percent today to 63, according to New York-based derivatives broker GFI Group Inc. The index has fallen by more than a third since trading started Jan. 18,

About 2 percent subprime mortgages made last year were more then 60 days late after five months, nearly twice the rate for ones made in 2005, and the worst rate in at least seven years,....

Labels: ,

wci "master of desaster"

what a desaster. negative orders, cash burning, buying call options on debt, still way too optimitic as usual on almost every point like defaults, cash flow, debt to capital etc.

too harsh? just read what they have promised back in november 2006!

2006 year-end backlog: $911.2 million vs. $2.05 billion in 2005

Fourth quarter figures include $118.3 million of pre-tax asset impairments & write-offs

Overall company gross margin as a percentage of revenue for the fourth quarter of 2006 was negative. Excluding Write-offs, company gross margin as a percentage of revenue for the fourth quarter of 2006 was 14.4% versus 22.9% in the fourth quarter of 2005. and 7,9% for the tower division

``During the fourth quarter, we recorded real estate inventory impairment losses totaling $91.4 million. At one community in Southwest Florida, a revised product and marketing plan introduced earlier in the year failed to produce sales as expected, which led us to conclude that additional pricing reductions were needed, which resulted in an impairment charge of approximately $84.9 million (naples! 45 % of bookvalue)

The default rate for towers that closed during 2006, and particularly during the fourth quarter, was higher than our estimate and historical average, but generally lower than many analyst and investors predicted. Taking into consideration our recent tower closing experience and the individual locations and mix of sold units, we estimate that our tower defaults during 2007 will range from 8% to 10% in aggregate. As we close towers and collect the receivables, we expect to reduce our debt significantly, and ultimately lower our net debt to capital by year-end 2007 to about 50% from our year-end 2006 level of 66% (was already their goal for end of 2006)

The aggregate value and number of new Traditional and Tower Homebuilding net orders for the fourth quarter were negative, due to cancellations and defaults of 276 outnumbering gross orders of 262

17 towers were under construction and recognizing revenue during the quarter compared with 25 in the same period a year ago

The net number of new tower orders for the quarter was negative 22, as defaults of 27 outnumbered gross new orders of five. For the quarter, there were 27 defaults recorded out of 302 expected to close. The default rate would be 12.9% if the 12 defaults reserved for actually defaulted.

For the year ended December 31, 2006, net cash used in operating activities, including the purchase and development of real estate inventories, totaled $489.6 million compared with cash used in operating activities of $8.9 million in the same period a year ago (dead man walking....)

Total liquidity, measured as the sum of cash plus available capacity under the unsecured revolving facility, totaled approximately $468.1 million at December 31, 2006 based upon the maximum amount available to borrow under the company's senior unsecured revolving credit facility of $930 million. The ratio of net debt to net capitalization of was 66.3% compared with 55.1% at December 31, 2005

During the fourth quarter of 2006, the company invested $25.7 million of equity in capped call options that give it the right to repurchase up to 5,000,000 shares of WCI common stock at an average price of $13.63. The company may choose to settle the derivative contracts in cash, in which case it would receive payment of the difference between the share price at the maturity date and an average exercise price of $13.63. The exercise price would rise dollar-for-dollar once the cap, averaging $25.55, is reached ( looks like a good call options on debt....)

Based upon the closing price of $21.68 on February 23, 2007, the estimated value if unwound would be approximately $34.5 million (wait after the plunge today........)

i hope i have the humor to stand the conference call......

disclosure: short wci

some comments from the call:

they are committed to maintain their low leverage....quickly added relatively low....too bad that they have already one of the highest and missed every goal they set the last years.

demand will eventually return....quickly added "and it will" (sounding not so comfortable....)

longer term the florida market will stay strong....( but they are running out of cash and credit in the near term)

affordability issue less an issue for wci because of the the target the more luxury buyer....and it wasn´t a big problem in the last years.......really? with rising prices of course not.....

691 spec homes in the traditional homebuilding segment!

lots of tower delays due to construction problems (also "one bal harbour")

almost 100% of the condotels are sold to investors ( i can smell defaults...)

they will break 2 credit covenants but are of course they are still optimistic to negotiate to new terms

average land position 5 years old. lots of appreciation build in. no impairments on the horizon....(at present conditions......)later in the call he said that almost no land is moving......that makes sense. house prices are already to 2003/2004 levels. who wants to buy land (even at 2002/2003 prices) when nothing is selling........

they have left 85 mio left at a creditline. they need 65 mio to buy the rest of the option construction in september (if cash flow allows it) they are still committed to buy on debt the stock. they call it a smart transaction because they buy under book value (when they have more write offs like the naples ones....) amazing!

media bashing for bad news.

putting them on the block via goldman. but who will buy this pos and at what price.

still betting that with a 10% defaultrate they will get the $1 billion cashs flow. with the defaultrate over 12% in the latest quarter a big bet......

they argue that with the big bal harbour project (and another one) were selling started in 2003/2004 only few people will let their 20% deposit and the "gain" in value left at the table. and they say that already potential buyers are lining up in lists to get the objects.... (i think wci will then discount them with the 20% deposit) today there are already 108 obkects in the "one bal harbour" project up for sale.....

the stock is down almost 1%! (better than the overall market.....i´m speechless)


liquidity and risk taking / Jeff Saut

great stuff from jeff saut! (headline for more!)
looks like in china (down 9% they have become a little more nervous )

zumindest in china scheint diese these heute einzutreffen. firm believes liquidity certainly plays a role and currently the monetary base is exploding. Moreover, it is not just our money supply that is surging but Austrailia’s (+13% year-over-year), England’s (+13%), the Euro Zone’s (+9.3%), Korea’s (+10.3%), China’s (+16.9%), etc.

Yet as my firm has suggested, while liquidity is unquestionably a driver of asset classes, if investors are unwilling to take that liquidity and buy something with it asset classes go nowhere. Manifestly, you can throw all the liquidity you want at the markets and if investors have no “risk appetite” they will merely take said liquidity and stuff it in a money market fund.
We, therefore, have argued that investors’ risk appetite is the ultimate driver of asset prices and after the nearly unprecedented rally from July 2006 to February 2007, participants’ risk appetites are currently high. When this will change is unknowable, but change it will.

i´ve put up a chart from end of 2006 that meassiures risk taking. but you just have to look to the spreads, the latest action in the private equity sector, carry trade etc to see that risk taking is going into extra innings.....

ich habe hier einfach mal nen chart von ende 2006 genommen. man muß aber nur auf die spreads und die letzten wahnwitzigen private equity transaktionen, den carry trade etc blicken um zu sehen das hier wohl bereits die verlängerung läuft...

Labels: , , ,

Monday, February 26, 2007

china down 9%, biggest slump in 10 years!

uhh! healthy correction or the beginning of something more severe? funny how they blame (in part) the raise in the bank reserve requirements for the decline. here is the story on the raise

since then the stock market has climbed higher and higher....... looks to me like an excuse for the slump. the next days will be key to see if this could lead to more or the excess continues.

ganz schön happig. ob gesunde korrektur oder der start von etwas ernsten? lustig wie jetzt die erhöhung der bakreserven als (teil) begründung herangezogen wird. lest euch den link oben vom 16. feb. durch. danach sind die aktien lustig weiter gestiegen. die nächsten tage werden wohl entscheiden ob es bei einer "gesunden" korrektur bleibt.

China's Stocks Have Biggest Tumble in 10 Years; Banks Plunge

China's stocks tumbled the most in 10 years as some investors judged record gains in key indexes as excessive. Citic Securities Co., the nation's biggest publicly traded brokerage, led declines.

``The market's very sensitive as it's been trading at record levels and some stocks are considered overvalued,'' '

China Minsheng Banking Corp. led declines by lenders as the central bank raised the reserve ratio this week for the fifth time in eight months, reducing funds available to commercial banks for lending. ( on top of several rate hikes and some warning words from officials, funny that the imminent reaction on the decision were higher stock prices...until today. maybe they should have use a more clear warning this one :-)

dazu noch diverse zinserhöhungen sowie warnende worte der offiziellen. die unmittelbare reaktion waren im übrigen höhere aktienkurse....bis heute. evtl hätten sie ihre warnungen deutlicher formulieren sollen...z.b wie das teil oben.... :-)

here is a quote that should have had an impact / diese zitat hätte eigentlich wirkung zeigen müssen :

Cheng Siwei, vice-chairman of the National People’s Congress has warned investors that “in terms of profits, returns and other indicators, 70 per cent of listed companies on the mainland do not meet international standards”.

The Shanghai and Shenzhen 300 Index, which tracks yuan- denominated A shares listed on China's two exchanges, plunged 250.18 points, or 9.2 percent, to 2457.49 at the close. The measure, which jumped 13 percent in the past six sessions, closed at a record 2707.68 yesterday.

The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, plunged 8.8 percent to 2771.79. Today's tumble was the biggest since Feb. 18, 1997. The Shenzhen Composite Index, which covers the smaller one, dropped 8.5 percent to 709.81. The measure has surged 29 percent this year.

Today's rout wiped out $107.8 billion from a stock market that doubled in the past year. The benchmark has gained or fallen at least 3 percent on 10 different days this year.

`Healthy Correction'
Stocks surged last year after a government plan to make more than $200 billion of state-owned stock tradable revived investor demand and paved the way for sales by some of the nation's biggest companies. ( i think this could be only the beginning of a healthy correction..../das könnte der anfang einer sehr ausgedehnten korrektur sein....)

and i think this one is even more impressive. showing the massive outperformance to the rest of the emerging markets and the excess in the last quarter!

dieser chart hier zeigt noch genauer wie sehr die chinesischen aktien den rest der ebenfalls boomenden em abgehängt haben. man beachte nur das letzt quartal....

``China has gone up so much,'' said Winson Fong, who manages $2 billion as chief investment officer at SG Asset Management in Singapore. ``It's not a bad thing to have a healthy correction as it provides an opportunity to correct over-valuations and allow people who have missed out to start buying.''

looks like russ winter nailed this one just in time. make sure you read his post from yesterday

here is today´s take from marc faber

a must hear! :-) / unbedingt anhören!

Labels: , , , ,

adding fuel to the fire....Norway's $287 Billion Pension Fund May Invest in Real Estate and Private Equity

wow! i´m pretty sure the markets will listen and feel the impact. unfortunately this announcement will add fuel to the private equity and property madness. but maybe this could also mean that the top is pretty close. looks really like they are late to the party......( at least that is what i hope....) on the other hand who really wants to buy bonds these days......

donnerwetter. denke die märkte werde es mit wohlwollen vernehmen. dummerweise wird damit noch mehr öl ins feuer von private equity und immobilien gegossen. aber ectl. bedeutet es ja auch das das ende der fahnenstange bald erreicht ist. mir erscheint es so als wenn norwegen doch reichlich spät auf den pe und immoboom draufspringt (zumindest hoffe ich das....).auf der anderen seite kann ich es sehr gut nachvollziehen das die keine anleihen kaufen wollen........

here are some more facts on the norweign fund :
The value is estimated to grow to about NOK 1700 billion by the end of 2006, equivalent to 84 per cent of GDP.

On 30 June 2006 the actual benchmark portfolio consisted of 40.6 per cent equities and 59.4 per cent fixed income investments

Equities are invested 50.1 per cent in Europe, 35.5 per cent in the Americas and South Africa and 14.4 per cent in Asia and Oceania.

Bonds are invested in Europe (59.8 per cent), North America (34.2) and Asia and Oceania (6 per cent).

In total 22 per cent of the fund is managed by external managers ( thank god that they have only outsourced a small portion to folks like goldman etc / zum glück haben die nur nen keinen teil an goldman und co gegeben....)

Feb. 26 (Bloomberg) -- Norway's $287 billion global pension fund, Europe's largest retirement savings plan, may invest as much as 15 percent of its assets in property and leveraged buyout funds to boost returns. (looks like this graph from pimco is already outdated....sieht so aus als wenn diese daten von pimco bereits überholt sind)
Knut Kjaer, head of the fund, plans to put 10 percent into real estate and infrastructure investments and 5 percent into LBO and venture capital funds starting next year. The switch will have to be approved by Norway's government.

``This is to diversify and to increase the expected returns of the assets,'' ..... The fund, set up in 1996 to preserve a portion of the country's oil wealth for future generations, currently invests only in stocks and bonds.

Retirement plans globally are shifting into so-called alternative investments. Pension funds in the world's seven biggest markets now have 14.4 percent of their assets in private equity, real estate and hedge funds, up from 7.7 percent in 2001,

Kjaer's fund returned 11.1 percent in 2005, while the country's benchmark OBX Index gained 40 percent. He is barred from investing in Norway, the world's fifth-largest oil exporter, to prevent the economy from overheating.

The fund took in 220 billion kroner ($35.9 billion) in 2005 from oil and gas sales and taxes, and won't start paying out money for another decade or so,

New Investments
Property investment increased about 26 percent worldwide in 2006 to $600 billion
, ... Investment in European commercial real estate reached 242 billion euros ($319 billion), the ..... This year there may be an excess of money chasing a shortage of property in Europe, ...

Kjaer said he probably will invest in property funds rather than make direct purchases of real estate.

The fund's diversification plans trail other pension funds. The $225 billion California Public Employees' Retirement System, the largest public U.S. pension fund, has been investing in private equity since the 1990s, and has put money into funds run by firms such as Hellman & Friedman LLC, Texas Pacific Group, Carlyle Group and Madison Dearborn Partners LLC.

``The party has been going on for while,'' .... ``The chance for them to add value now is less than it was three years ago.''

especially when you look at the latest deals..../ besonders wenn man sich die letzten deals ansieht....,

European private equity firms returned an average 24 percent in 2005, ...., Europe's benchmark Dow Jones Stoxx 50 Index rose 21 percent.

Investing in private equity will probably increase the amount the fund pays in fees, which currently stands at about 1 percent of assets invested for the 80 percent of the fund that's managed internally, Kjaer said. LBO firms typically charge management fees of about 2 percent and keep 20 percent of the profits from their investments.

Norway's pension fund surpassed Stichting Pensioenfonds ABP of the Netherlands last year to become Europe's biggest retirement fund.

More Equities
Kjaer also plans to increase the portion of the fund invested in equities to 60 percent from 40 percent, and cut fixed-income investments to 25 percent from 60 percent. Any change in asset allocation will probably be made by shifting money coming into the fund to the new asset classes. (wow, norwey is alread one of the most aggressive oil inestors out there / norwegen ist schon jetzt einer der agressivsten ölinvestoren! )

Kjaer has no plans to invest in hedge funds. Because of the long-term nature of the Norway fund, with an investment horizon of about 100 years, he doesn't have to protect against periodic declines in stock markets.

``You don't find many other funds having the same long time horizon,'' Kjaer said. ``It's a many generations perspective.''

you must give norway credit to develope such a fund and the long-sighted approach. their fund was the first and a model to all the other that followed (russia, uae etc).

man muß den hut vor den norwegern ziehen. sie waren die ersten überhauot die so einen generationenfonds in die welt gesetzt haben. die anderen wie russland, uae folgen nun diesem beispiel.

Labels: , ,