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Numani

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About Numani

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  1. It is easy to understand the higher multiples for the higher earners. The move to also modelling lending on affordability is easy to understand as well. A part of everyones spending is fixed spending and another part is variable spending. The lender knows often there is a lot of "fat" in the variable expenditure that can be released should the borrower have any difficulties with the monthly payments. Their biggest worry is that the high earner loses their job and can not get a similar paying high paying job. But as long as its not more than 1 in 100 borrowers then why care about that. Anyway the debt has often been parcelled up and sold as Mortgage Backed Securities anyway. Where they collect a nice margin and probably only incur losses should the default profile be totally horrendous.
  2. John Mauldin weekly newsletter Frontline Weekly guest writer is Gary Shilling. Some very interesting stuff. Of course if analytical research and thought is not your cup of tea...probably bore you to tears. Some great charts as well.
  3. Lets build some houses Home builders slam on the brakes Housing starts hit six-year low while permits, a key sign of builder confidence, slide to the lowest since 1997. NEW YORK (CNNMoney.com) -- New housing starts sank to the lowest level in more than six years in October and a key measure of builders' confidence in the market hit a nine-year low, a government report showed Friday. Both housing starts and applications for new building permits tumbled well below Wall Street forecasts - a sign that the slumping housing market has not yet hit bottom. "Today's figures clearly reveal that a quick turnaround in this sector is not just around the corner," said Anthony Chan, chief economist for JPMorgan Chase Private Client Services.
  4. CNN Money Up 42% over a year ago; Colorado, Nevada and Georgia lead RealtyTrac, an online marketplace for foreclosure properties, reports that 115,568 properties entered into some stage of foreclosure in October, a 42 percent increase over last year and an incidence of one for every 1,001 U.S. households. The comparison with October of 2005 was particularly dramatic because that month in 2005 recorded the highest foreclosure rate last year. LOTS OF PAIN IN THE USA
  5. "Since last July I have predicting that the US will enter into a recession in 2007. By now it is clear that several sectors of the economy are already in a recession, that Q4 growth will be lower than Q3 growth and that a formal recession (two or more consecutive quarters of negative growth) will very likely start by Q1 or at the latest Q2 of 2007. It is is certainly the case that we are already in a severe housing recession; and this housing recession is nowhere near bottoming out as building permits - the most important leading indicator of future housing - fell another 5% last month and are already down 30% and likely to fall even more. In the housing sector all starts with permits that lead to housing starts, to construction spending, employment in housing and sales. The continued fall in permits is the strongest signal that a 15% fall in housing starts (from trailing peak) is only the beginning of a much sharper adjustment in the housing sector. The sharp fall in new home prices - down 10% already - the beginning of a much bigger downward adjustment in prices ahead. And now in addition to a housing recession and the coming non-residential construction recession, we are also into an auto sector recession that is getting worse by the month as major auto makers as slashing production in face of sluggish sales and massive excess capacity. But this is not just a auto sector recession. We are also already in a manufacturing recession and non-manufacturing industrial recession too: two months of consecutive fall in industrial production, a manufacturing ISM that was borderline awful (just above the 50 recession mark), continued and persistent fall in manufacturing employment (-39K in October alone). Things are getting particularly bad in consumer durables sectors (autos, home appliance, furniture, etc.) as these are closer to housing, but more broadly almost all industrial sectors are contracting. So, housing and construction and manufacturing and industrial sector are already in a recession. We are not yet in a service sector recession but we are getting close to it. Wal-Mart's sales number were not only awful for October and even worse officially expected for November. The troubles of Wal-Mart - in spite of much lower oil prices - are also the troubles of most other retailers as the figures yesterday for most major retailers' same store sales were mediocre and disappointing. Thus, the expected pick-up in sales for the holiday season is now fizzling away. The sorry state of the retail sector is also signaled by flat or falling employment levels in this sector. And even today's services ISM report was much worse than the headline figure was showing. The headline was up but the details of it were worrisome: the indeces for new orders, employment, and the order backlog all fell sharply while the price index shows lessened pricing power by service sector firms consistent with the weakening of the overall service sector." full read: Roubini Global Economics
  6. I like how they are testing this in Northern Ireland. i guess not trying to upset the core voters in England! While I do not subscribe to everything the people at Gavekal say - one thing they said was western economies that want to compete with the Far East will likely need their governments to raise porperty taxes and consumption taxes to provide essential services as Income tax and corporation tax can be competed away(avoided) by basing companies and individuals offshore(other countries) especially if your talking about the City of London.
  7. Reports earlier this week have shown prices of both new and existing homes posting declines not seen in decades. And in a sign of the slumping housing market, Pulte Home the No. 1 builder in terms of market value, announced it is cutting 800 workers, or about 10 percent of its staff.
  8. New home sales surged 5.3% month-over-month in September on top of a 3.8% rebound in August. The inventory backlog got cleared to the tune of 1.9% and this helped slice the months' supply tally to 6.4 months in September from 6.8 in August and 7.2 in July. How sales soared and stockpiles sagged so much was because the builders, facing the stress of slumping homeowner traffic and few bids on their properties for the better part of the past year, have become, shall we say, a tad frantic. Desperate times require desperate measures and median new home prices were cut 9.3% on the month and are now down 9.7% year-on-year – the steepest deflation since December 1970 (when, if memory serves us correctly, we were in recession). The days of merely handing out upgrades, swimming pools and financing points to attract the buyers are clearly over – now the builders are doing it the old fashioned way ... price cutting. And since the April peak in prices, they have come crashing down at a 33% annual rate, which is the sharpest falloff over such a short time period on record (back to 1963 for all the echo-boomers out there). Since newly built homes do compete with the resale market, do not think for a second that we are not going to get another down-wave of deflation in existing homes. The impact on the wealth effect, confidence and spending, considering that real estate today is valued at over $22 trillion on the household balance sheet, could well be considerable. So while Alan Greenspan may well have been prescient that housing has bottomed, perhaps he was referring to the "price-tobook" for the homebuilding stocks. But with single-family building permits down 31% year-on-year (largest decline since January/91 – what do you know? Another recessionary period), it is conceivable that residential construction will continue to shrink right through to the end of next year. And if we are right that residential construction spending in 2007 moves back to 2003 levels, it is difficult to believe that employment in this sector, which has leveled off, but not yet contracted, will stay at current levels. The implications could be worth as much as 500,000 lost payroll jobs in the coming year. (David Rosenberg) Bold my emphasis Rosenberg Profile http://askmerrill.ml.com/res_profile/0,,15445,00.html
  9. Found this an interesting read. They really go to work on a lot of the 'bear' assumptions/scenarios Either way we will know so enough which camp was right. Correcting__not_collapsing___Oct_06.pdf Correcting__not_collapsing___Oct_06.pdf
  10. selected quotes from Seymour Pierce research note out this morning "The outlook for the current trading year and beyond is very good. On a macro level, we are expecting the IVA market to grow to over 40,000 during 2006 (from 20,293 in 2005), and to rise to over 90,000 in the next three years. company is moving into larger, purpose-built headquarters which will allow it to process some 500 IVAs per month - well up from the current (we estimate) 130 or so. the company contends that creditors that sign up to a debts.co.uk IVA are in line to receive 42p in the pound. This is higher than the industry average (37p, according to PriceWaterhouseCoopers) and higher than (for example) DebtMatters' 37p in the pound."
  11. Is there anywhere on the net I can see this data? i.e the bonds prices and explanation of the structure for each MBS
  12. The Building Society need only worry about getting the bond away at issue after that its no concern of theirs how it trades. All they do is the servicing - collect the mortgage payments minus a servicing fee and pass the rest onto the bond holders. The holders of bonds will trade it in the market as they see fit. The buyers of the bond. Will see limited risk based on lowish LTV. limited prepayment risk - due to restrictions on paying capital off. The Building Society could get this away at 4.8% Yield. Get all the loan capital back at issue of the bond. plus the 0.2 % maybe more servicing fee and get about finding some new borrowers. Also remember the building society gets its capital from its savers who they pay something like 4% or borrow at Libor etc. See the spread they make about 1% of the total mortage book and offset all risk.
  13. They will offset the risk through issuing a Mortgage Backed Security. Probably yielding about 4.8% at issue. With Strict Multiples and LTV criteria of course. If they can get more seasoned loans in with a lot of more equity than 25% even better Prepayment risk is limited " Over-payments of up to £500 in any one month are allowed without penalty but all other early repayments are charged at three per cent of the amount repaid."
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