Clipmarks | BobbyDelray's Investing collection

Bay Area home sales remain at two-decade low

Fri, 14 Mar 2008 16:16:59 GMT

clipped by: BobbyDelray

The waiting game between Bay Area buyers, sellers and lending institutions continued last month as sales dipped below 4,000 for the second month in a row, a real estate information service reported.

January and February are the two slowest months in DataQuick's statistics, which go back to 1988. They are the only months with sales below 4,000.

A total of 3,989 new and resale houses and condos sold in the nine- county Bay Area in February. That was up 11.2 percent from 3,586 in January, and down 36.7 percent from 6,305 for February 2007

Merrill Lynch: Recession to Be Worst Since 1970s

Thu, 13 Mar 2008 23:03:11 GMT

clipped by: BobbyDelray

Clip Source: blogs.wsj.com

Merrill Lynch economist David Rosenberg, one of the most bearish Wall Street economists, says to look past the 1990-91 recession as a guide to the current downturn. The key difference: the depth of home-price declines.

Mr. Rosenberg says in a note to clients that the current downturn is hitting more broadly than the credit crunch and real estate meltdown in the 1990-91 recession, which lasted eight months (as did the mild 2001 contraction)

Home prices today are falling in 85% of the country vs. 40% during that period, he notes.

Mr. Rosenberg, who was among the first economists to forecast a 2008 recession. He sees average prices nationwide dropping 20% to 30% more, on top of the 11% decline since the 2006 peak.

The mid-1970s recession “not only saw a sharp and sustained rise in food and energy prices, as is the case today, but also saw a very similar consumer balance sheet squeeze from a simultaneous deflation in residential real estate and equity assets

Home Sellers Competing with Sales of Foreclosed Properties

Fri, 25 Jan 2008 04:09:41 GMT

clipped by: BobbyDelray

Clip Source: blogs.wsj.com

The continuing troubles in the housing market — see “Existing-Home Sales Resume Decline” — spell trouble for homesellers, who are competing against the sellers of foreclosed properties. In one example cited in Mr. Hagerty’s story, a four-bedroom house in a Phoenix suburb sold for $775,000 in August 2006. Then a lender acquired the home through foreclosure last year. It sold again in December for $380,000.

It’s getting harder to hide from the housing bust, writes James R. Hagerty in today’s Journal. Even the Pacific Northwest and North Carolina are feeling the pain, both areas until recently had avoided the housing slump. Even Manhattan, Mr. Hagerty writes, is feeling the pinch, thanks to Wall Street’s woes.

Still, Mr. Hagerty points out that local markets vary hugely, according to the Wall Street Journal’s quarterly survey of housing data in 28 major metropolitan areas. Inventories are enormous in Phoenix, Florida, Las Vegas and the Detroit area.

Tags: housing, forecclosures

Oil Hits $100 a Barrel for the First Time

Wed, 02 Jan 2008 18:17:24 GMT

clipped by: BobbyDelray
clipper's remarks: $102 equals all time inflation adjusted price.

Clip Source: www.nytimes.com

Oil prices rose above the symbolic level of $100 a barrel for the first time on Wednesday, a long-awaited milestone in an era of rapidly escalating energy demand.

The rise in oil prices in recent years has been driven by an unprecedented surge in demand from the United States, China and other Asian and Middle Eastern countries. Booming economies have led to more consumption of oil-derived products such as gasoline, jet-fuel and diesel. Meanwhile, new oil supplies have struggled to catch up.

Oil is now within reach of its historic inflation-adjusted high reached in April 1980 in the aftermath of the Iranian revolution when oil prices jumped to the equivalent of $102 a barrel in today’s money.

Unlike the oil shocks of the 1970s and 1980s, which were caused by sudden interruptions in oil supplies from the Middle East, today’s surge is fundamentally different.

Prices have risen steadily over several years because of a rise in demand for oil and gasoline

Tags: oil, price, record, inflation

Gold on its way to $2,130 an ounce?

Wed, 02 Jan 2008 18:11:58 GMT

clipped by: BobbyDelray
clipper's remarks: Gold stocks anyone?

Clip Source: www.bloomberg.com

Gold rose beyond $850 an ounce in London, breaching the record set more than a quarter-century ago

Prices advanced 31 percent last year, the biggest gain since 1979, when U.S. inflation was more than 13 percent.

Unless the world suddenly becomes a wonderful place to be, the gold price will continue to move higher,'' said Jeremy Charles, global head of precious metals in London at HSBC Bank

Bullion also advanced for a seventh consecutive year in 2007 as investors sought an alternative to the declining value of the dollar.

Gold rallied 12 percent in the fourth quarter, climbing to a 27-year high since mid-September, when the U.S. Federal Reserve cut interest rates.

JPMorgan Chase & Co. predicts gold will strengthen to $950 within six months.

Based on 1980 dollars, the January 1980 record of $850 is the equivalent of about $2,130 today, according to an inflation calculator on the Web site of the Federal Reserve Bank of Minneapolis.

Tags: gold, bullion

Epix Soars 50% On Alzheimer's Data

Thu, 20 Dec 2007 03:34:40 GMT

clipped by: BobbyDelray

Clip Source: blogs.forbes.com

EPIX Pharmaceuticals (NASDAQ: EPIX - News), today announced compelling top-line results from a Phase 2a two-week clinical trial of its novel 5-HT4 agonist, PRX-03140, in patients with Alzheimer’s disease. The results show that patients receiving 150 mg of PRX-03140 orally once daily as monotherapy achieved a mean 5.7 point improvement on the Alzheimer’s Disease Assessment Scale cognitive subscale (ADAS-cog) versus a 0.2 point worsening in patients on placebo (p= 0.005). Patients on a 50 mg dose of PRX-03140 showed a 1.1 point improvement on the ADAS-cog.

After reviewing these data, Serge Gauthier, M.D., Director of the Alzheimer's Disease Research Unit at McGill University, stated, “There is such an urgent and undeniable need for additional safe and effective treatments for Alzheimer’s patients. Findings like these data are not only encouraging and compelling – they appear to represent a step forward in our ability to understand and combat the effects of Alzheimer’s.

Tags: alzheimer's, epix, alzheimer’s disease assessment scale, brain

The Housing Bubble

Thu, 13 Dec 2007 19:50:41 GMT

clipped by: BobbyDelray
clipper's remarks: The chart on House-Price-to-Rental Ratio is one of the best illustrations I have seen of the current housing bubble. In many places it is now substantially cheaper to rent then own. In fact, in many places the cost of ownership is more then 150 percent of the cost of renting after calculating in the tax benefits.

Comments?

Clip Source: online.wsj.com

HOME OWNERSHIP

U.S. home ownership rates from 1900 through the current year

HOUSE PRICE-TO-RENTAL RATIO

Reflecting the booming real-estate market since 2000, the ratio of home prices to rent expenditures has risen sharply.

Ratio of OFHEO house price index to personal consumption expenditures on rent

Source: Congressional Budget Office; Office of Federal Housing Enterprise Oversight; Department of Commerce, Bureau of Economic Analysis

COMMERCIAL PAPER

Earlier this year, many mortgage-backed assets held by SIVs went bad suddenly. Assets could be downgraded from top to bottom overnight. Asset prices stop falling when markets conclude that all the bad news has been factored in.

Overnight commercial paper interest rates, daily through Nov. 20, 2007

PRICES OF SUBRPRIME MORTGAGE TRANCHES

Source: Markit ABX.HE index published by Markit

Financial Ties to Parents and Children Affect Boomer Retirement

Thu, 13 Dec 2007 19:05:50 GMT

clipped by: BobbyDelray
clipper's remarks: This was extracted from a good and interesting blog-- Sometimes I Feel Like a Piece of Bologna. This blog is worth visiting and adding to the reader.

Clip Source: generationsandwich.blogspot.com

Boomers, though arguably the most prosperous generation in American history, face mounting demands on their financial resources from both their adult children and their aging parents. In fact, one in six Boomers surveyed is "sandwiched," providing assistance to both their parents and adult children, according to Ameriprise Financial’s Money Across Generations study.

Boomers are torn between helping their adult children pay off debts and get started, and helping their aging parents with necessities. This help often comes at the expense of funding their own retirement.

My husband and I have very different perspectives on this. His parents provided everything for him through college, and were generous until their deaths. My parents provided nothing. I paid for college, grad school, and all expenses from junior high forward. Yes, it was very hard and I missed out on a lot. But I learned to be independent and make my own way.

Sometimes I Feel Like a Piece of Bologna

Tags: boomers, seniors, retirement

Nearly 20,000 Downgrades — and Counting

Thu, 06 Dec 2007 20:02:58 GMT

clipped by: BobbyDelray

Clip Source: blogs.wsj.com

The tsunami of subprime-related bond downgrades this quarter sent shockwaves throughout the financial markets. Now that the tide has weakened, analysts are surveying the wreckage.

According to research from Deutsche Bank, credit rating companies Moody’s Investors Service, Standard & Poor’s and Fitch Ratings have issued an unprecedented 19,795 debt downgrades so far this year among securitized assets.

That compares with the 2,539 separate downgrades they issued for all of 2006, and the previous annual record for downgrades, which was 4,168 in 2003.

The percentage of subprime-mortgage-backed debt affected by downgrades is much higher – for example, 58% of collateralized debt obligations backed by subprime collateral that were issued from 2005 to 2007 have been downgraded

“Even more alarming is the degree to which very highly rated securities seem to have deteriorated overnight

some securities issued by collateralized debt obligations had their ratings slashes from triple-A to “distressed”

Tags: downgrades, subprime, collateralized debt, securities, distressed

Bush Administration to Bailout Subprime Fools

Sun, 02 Dec 2007 01:20:49 GMT

clipped by: BobbyDelray
clipper's remarks: Would you like to receive a nice low government subsidized loan on your home? How about 2 percent?

Clip Source: blogs.wsj.com

The WSJ is reporting that the Bush administration and major financial institutions are close to agreeing on a plan that would temporarily freeze interest rates on certain troubled subprime home loans. The plan is being negotiated between regulators and a coalition of mortgage-related companies including Citigroup Inc., Wells Fargo & Co., Washington Mutual Inc., and Countrywide. Details are still being worked out but the plan might freeze teaser rates for as long as seven years.

“People made their own judgment to buy homes on their own. When people make profits off of their properties, they don’t share them with others. Why should rest of us pay for their mistakes?”

One counterargument is that some borrowers didn’t know what they were getting into. “The banks and mortgage lenders that pulled out all the stops to persuade them to the contrary were in a far better position to know,” wrote former Robert Reich on his blog last month. “After all, they had lots of experience at this game.”

Tags: subprime. loans, bailout, bush, administration

MIT index shows first drop in commercial property value since 2003

Mon, 19 Nov 2007 19:36:28 GMT

clipped by: BobbyDelray
clipper's remarks: Follow the links for additional information.

Clip Source: web.mit.edu

Indicates housing woes, credit crunch 'may be spreading'

The value of U.S. commercial real estate owned by big pension funds fell 2.5 percent in the third quarter of 2007, according to an index produced by the MIT Center for Real Estate.

The drop in the MIT quarterly transaction-based index (TBI) may not only spell the end of a five-year rally that saw commercial property prices effectively double, but it may also signal that weakness in the housing market is spilling over into commercial real estate.

"The fall in our index is the first solid, quantitative evidence that the subprime mortgage debacle, which hit the broader capital markets in August, may be spreading to the commercial property markets," stated MIT Center for Real Estate Director David Geltner.

The TBI is based on transaction price data from the National Council of Real Estate Investment Fiduciaries (NCREIF).

the index of commercial real estate prices is updated quarterly and published on the Center's website, web.mit.edu/cre.

Tags: mit, ransaction-based index, index shows drop, commercial property value, 2003

GoldCorp (GG)

Fri, 02 Nov 2007 02:46:30 GMT

clipped by: BobbyDelray
clipper's remarks: Six times your money since 2001 and still going. Each bar equals one month.

Clip Source: charts.barchart.com

Tags: gold, investing

Gold Tops $800 for 1st Time Since 1980 nearing all time high

Thu, 01 Nov 2007 04:43:07 GMT

clipped by: BobbyDelray
clipper's remarks: When gold went over $800 an ounce in 1980 it was all that investors were talking about. With gold approaching its all time high of $875 you really aren't hearing much if anything. Is gold the next oil?

Clip Source: ap.google.com

NEW YORK (AP) — Gold barreled above $800 an ounce Wednesday for the first time since 1980 as investors cheered the Federal Reserve's decision to lower its benchmark interest rate by a quarter point.

The Fed dropped its federal funds rate to 4.50 percent, as the markets widely anticipated. Lower interest rates tend to undermine the dollar and raise the allure of precious metals as an investment alternative. The dollar stumbled to another low against the euro following the Fed's decision on Wednesday, helping drive gold higher.

Gold last topped $800 an ounce in 1980, when prices reached as high as $875 an ounce in January. Adjusted for inflation, an $800 ounce of gold in 1980 would be worth more than $2,000 today.

While the $800 mark means something less than it did 27 years ago, gold prices have surged roughly $150 an ounce since mid-August

Tags: gold, investing, 1980, dollar, inflation

Expect $60 oil soon?

Wed, 31 Oct 2007 15:44:06 GMT

clipped by: BobbyDelray

Clip Source: members.forbes.com

Here's how Littell sees it. Last year Saudi petrocrats thought demand would slacken at the same time that oil production rose from sources outside the Organization of Petroleum Exporting Nations. They cut back Saudi production from 9.5 million barrels a day in March 2006 to 8.5 million a year later in order to keep supply and demand balanced and crude prices hovering around $60 per barrel.

But the Saudis overestimated non-opec production.

Check out the relationship between prices and production in the accompanying chart. The Saudis hold the key to long-term oil prices since they are one of the few exporters--Kuwait and Abu Dhabi are the others--with the ability to increase production significantly.

How long before we get some relief?

Littell expects the impact of all that additional oil to hit U.S. markets in a couple of months or so. The Saudis "didn't plan on $80 oil," he says. "They wanted to keep it around $60 and did the wrong thing."

Tags: littell, saudi petrocrats, oil, price, production, estimates