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jmf

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  1. Moin from Germany, does this make sense? Although transport had little effect on the change in the CPI annual rate, within the division, a large upward effect came from petrol and oil. Petrol pump prices fell by around 1 pence per litre in September, compared with a fall of over 6 pence per litre a year ago.
  2. Moin from Germany, make sure you don´t miss the interactive map "Subprime Tidal Wave" !!!! http://online.wsj.com/public/resources/doc...SUBPRIME07.html Here the link to the "The United States of Subprime" http://online.wsj.com/article/SB119205925519455321.html
  3. Moin again from Germany The main event is not the one month number. It´s all about the change in sentiment.... The headlines from now on won´t be supportive for years to come..... Lot´s of headwind for the people that are still in denial
  4. Moin again, Excellent find! Here more details and the link http://www.hbosplc.com/economy/includes/01...dexSept2007.pdf Interest rate effect is increasing as borrowers come off very low fixed rates …… The CML estimates that around 1.3 million borrowers took out fixed-rate mortgages in 2005, and a further 1.5 million in 2006. The majority of these mortgages would have been fixed for two years. A borrower with a £114,000 mortgage – the average in 2005 - taken out at the average two year fixed rate in 2005 of 5.08%, would be making monthly repayments of £669.02. When the deal expires this year, the new monthly repayments would be £771.35 – an increase of 16% or £102 - assuming that the borrower moves onto the current average two year fixed rate of 6.58%. The overwhelming majority of borrowers coming off fixed rate deals are expected to be able to absorb the increase in payments. Most people's earnings will have risen since they took out their mortgage – average earnings have risen by 8% over the past two years - providing more income to finance the higher interest payments. House prices have also risen strongly in the past two years providing an equity cushion for new borrowers. The Bank of England recently estimated that the resulting 'payment shock' will reduce the annual post-tax income growth of the household sector by only 0.1 percentage points.* Static 'real' income growth in the first half of 2007 is also constraining housing demand Household disposable income in 2007 Q2 was unchanged from the level in 2006 Q4 once the effects of inflation are removed. (Source: ONS)
  5. Moin from Germany click on the link to see some extra tables. http://www.fxstreet.com/news/forex-news/ar...d0-fe6ab4c4170a LONDON (Dow Jones)--U.K. house prices fell in September for the first time since December last year, confirming that the housing market is slowing, lender Halifax said Wednesday. According to the Halifax house price index, released by HBOS PLC (HBOS.LN), house prices fell 0.6% on the month in September and were 10.7% higher on the year. In August, Halifax said prices rose 0.4% on the month and were 11.4% higher in annual terms. Economists surveyed by Dow Jones Newswires last week estimated prices rose by 0.4% on the month and 11.4% on the year. "September's price fall is consistent with the normal behavior of the market during a slowdown," said Martin Ellis, Halifax chief economist. Halifax also reported that in the third quarter of the year, house prices rose 0.9% compared with the second quarter of the year, down from a 2.3% quarterly increase in the second quarter and a rise of 3.0% in the first quarter of 2007. It marks "a steady downward trend in the rate of house price growth since the end of 2006," Ellis said. The average U.K. house price now stands at GBP198,500 from GBP199,770 in August, Halifax said.
  6. Moin from Germany, uh oh...... http://online.wsj.com/article/SB119058413986236614.html In the past decade, U.K. consumers have become more dependent on borrowed money, both to buy homes and to finance spending. As of July, total mortgage debt in the U.K. had reached £1.1 trillion ($2.2 trillion), more than double the level of 10 years earlier and equivalent to more than 80% of annual gross domestic product. In the first quarter of this year, U.K. homeowners tapped their home equity for about £13.2 billion, or 6.1% of disposable income, an indication of how much rising home prices have been raising consumer spending, which makes up about two-thirds of the U.K. economy
  7. Moin again, i found this number also interesting. The average sales price of homes delivered decreased to $296,000 in the third quarter of 2007 from $316,000 in the same period last year, primarily due to higher sales incentives offered to homebuyers ($46,000 per home delivered in the third quarter of 2007, compared to $35,900 per home delivered in the same period last year). In the last quarter they reported $43,700 per home delivered. With orders down almost 50% it looks like they have to offer more..... :-) Keep this number in mind when you read how stable prices still are......The incentives masking how prices are already slumping or should i better say crashing....
  8. Moin from Germany http://biz.yahoo.com/prnews/070925/cltu048.html?.v=101 Lennar Reports Third Quarter Results Tuesday September 25, 6:00 am ET - Revenues of $2.3 billion - down 44% - Loss per share of $3.25 (includes a $3.33 per share charge related to valuation adjustments and write-offs of option deposits and pre- acquisition costs, goodwill and financial services notes receivable) - Homebuilding operating loss of $787.7 million (includes $847.5 million of homebuilding valuation adjustments and write-offs noted above) - Financial Services operating loss of $5.2 million (includes $9.3 million of write-offs of notes receivable) - Homebuilding debt decreased $212.8 million; homebuilding debt to total capital of 33.5% - Deliveries of 7,636 homes - down 41% - New orders of 5,804 homes - down 48%; cancellation rate of 32% - Backlog dollar value of $2.2 billion - down 60% Compare this to the estimates from "Wall Street Finest" that have estimated a profit of $ 0,25 just 90 days ago.... Their latest call was for a loss of $ 0,55..... This kind of miss will be common when the financials will report late 07 or early 2008......
  9. Danke ! More nonsense from the BOE BOE Says Inflation Risks Have `Probably Receded' http://www.bloomberg.com/apps/news?pid=206...&refer=home ``The upside balance of risks to inflation,'' in their Aug. 8 forecasts ``had probably receded. The outlook was now more uncertain.'' That is the problem when central bankers never leave the "core" world and are living in the "Matrix".....
  10. Moin again, can someone from the UK please clarify "At the end of 2006, fixed-rate mortgages accounted for about 45% of the £1 trillion stock of outstanding mortgages, up from 25% in 2003" When they call it fixed rate in the UK how long are the rates fixed in general? Here in Germany the usual term is 10 years Thanks
  11. Moin from Germany, i suggest to read the entire piece including several charts. http://www.pimco.com/LeftNav/Global+Market...07+Bradshaw.htm The next twelve months will probably see most of these fixed-rate deals mature and interest rates for a majority of households rise. CML data already shows that 2-year, 75% Loan-to-Value (LTV) mortgage rates averaged 4.67% in July 2005 compared to 6.1% in July 2007 ...the bottom line is that come October, 2-year fixed-rate deals could be some 175bp higher than they were two years ago ....mortgage interest payments accounted for 17.7% of the average borrower’s income in June, up from 15.4% twelve months ago. This is the highest level since 1992, in spite of the fact that interest rates are about 40% lower than in 1992. Factor in repayment of principal, and debt-servicing costs are within spitting distance of the 1990 high. The RICS measure has fallen sharply since the middle of last year and is only just above the lows of 2005, which preceded a collapse in retail sales growth and led to a surprise interest rate cut in August 2005
  12. Moin from Germany, maybe this British humor deserves it´s own thread.... :-) http://www.dailymail.co.uk/pages/live/arti...in_page_id=1770 The crowd look at me as if I were stark, staring bonkers. One or two giggle. A woman in a raincoat sounds like a Victorian maiden aunt being propositioned by a cad. "You want to do WHAT!?' she shrieks. Even the weary representative from Northern Rock blinks and shakes her head uncomprehendingly. So I say it again: "I'd like to deposit some money, please. And while I'm at it, can I buy some Northern Rock shares?" .......
  13. Thanks from Germany for all the great laughs! Brilliant! Here is another example of the famous British humor... The reaction I got when I said I wanted to OPEN an account at Northern Rock http://www.dailymail.co.uk/pages/live/arti...in_page_id=1770 The crowd look at me as if I were stark, staring bonkers. One or two giggle. A woman in a raincoat sounds like a Victorian maiden aunt being propositioned by a cad. "You want to do WHAT!?' she shrieks. Even the weary representative from Northern Rock blinks and shakes her head uncomprehendingly. So I say it again: "I'd like to deposit some money, please. And while I'm at it, can I buy some Northern Rock shares?" ...... :-)
  14. Moin again from Germany, thank god that Northern Rock is so confident in the quality of their balance sheet ... from June The charge for loan loss impairment amounted to £56.8 million for the first half (2006 first half - £44.5million) representing 0.12% of mean advances to customers (2006 first half - 0.12%). The combination of high quality lending, low interest rates, low early arrears and continued strong average LTV of the portfolio have continued to contain the levels of loan loss impairment provisions required for residential mortgages. Write offs in the first half amounted to £8 million representing only 0.01% of outstanding residential mortgage balances. We do not expect to see a higher impairment charge in the second half than in the first half of 2007 This really reminds me of the talk from some US banks 12 month ago......
  15. Moin from Germany, speaking of "moral hazard".... If you look at this table and the growth it should be clear to anyone that Northern Trust was very aggressive during the past 12 month. It doesn´t fit well with the speech from King about "moral hazard".....
  16. Moin again, from the Economist Link For much of this year London's commercial-property market has been scaling new heights. In April HSBC, a British bank, sold its office tower in Canary Wharf to Metrovacesa, a Spanish firm, for £1.1 billion, the most ever for a British building. From the FT Tuesday the 4th September "CMBS demand collapses" http://news.yahoo.com/s/ft/20070904/bs_ft/...420071841281742 Experts said this trend will mean banks will have to lend at higher rates. It also means some lenders have been stuck with loans on balance sheets. They include HSBC, which provided £800m of debt for Metrovacesa, the Spanish group, to buy its headquarters for £1.1bn. That was in April but HSBC has been unable to complete a CMBS refinancing.. ..RBS estimates that European issuance was just EU1.5bn (£1bn) in July, compared with EU14.6bn the previous month and EU11.3bn in July 2006 - and spreads have risen.
  17. Moin from Germany, i like this one.... In an environment plagued by subprime related volatility, SIV’s represent a relatively safe haven of stable risk adjusted returns facilitated by structural protections designed to withstand and effectively respond to market vagaries.- Kumar Tangri, Principal, Eiger Capital He should talk to Barclays, IKB, Sachsen LB etc..... ;-)
  18. Moin from Germany, time for a repost. this complements the Hammerson story. http://www.economist.com/world/britain/dis...tory_id=9688146 ...This is because investors have driven prices too high, too fast. IPD reckons that yields on commercial property have fallen from 6.8% at the end of 2001 to 4.5% by the end of June, which means that they are now 1.7 percentage points below the cost of borrowing (see chart). .... Whether office prices will have a hard or soft landing is unclear. In the past investors in commercial property were somewhat insulated from market fluctuations because most tenants were locked into long-term leases. But this is no longer the case. Between 1995 and 2005 the average lease length declined from 13 years to less than 5 years. If demand falters, then rents, and property values, may tumble as quickly as they have climbed.
  19. Moin from Germany http://www.economist.com/world/britain/dis...tory_id=9688146 ...This is because investors have driven prices too high, too fast. IPD reckons that yields on commercial property have fallen from 6.8% at the end of 2001 to 4.5% by the end of June, which means that they are now 1.7 percentage points below the cost of borrowing (see chart). .... Whether office prices will have a hard or soft landing is unclear. In the past investors in commercial property were somewhat insulated from market fluctuations because most tenants were locked into long-term leases. But this is no longer the case. Between 1995 and 2005 the average lease length declined from 13 years to less than 5 years. If demand falters, then rents, and property values, may tumble as quickly as they have climbed.
  20. Moin from Germany, thanks for the plug :-) Here is a graph that shows how ridiculus the exposure in these off balance sheet vehicles is compared to the size of the Sachsen LB ( watch out for the West LB as a potential casualty down the road)
  21. This fits to the topic via Barry Ritholtz http://www.slate.com/id/2172224/ Amusing linguistic observations from Slate's Dan Gross: Hedge-Fund Phrase: Challenging Translation: Run for the hills! Hedge-Fund Phrase: Unprecedented, unique circumstances Translation: Stuff happens. But we had no clue. Hedge-Fund Phrase: Market volatility has produced unfair, unrealistic prices. Translation: The market is efficient only when it works in our favor. Hedge-Fund Phrase: Our results were affected by the selling behavior of other firms. Translation: We made the same dumb trades as everyone else. Hedge-Fund Phrase: We just want to protect investors. Translation: We just want to cover our butts. Hedge-Fund Phrase: This isn't a rescue. Translation: THIS IS TOTALLY A RESCUE!!!!!!!
  22. Moin from Germany, Mark Gilbert from Bloomberg has done a brilliant piece about Hedge Funds Hedge-Fund Guy Atones for His Subprime Bond Sins http://www.bloomberg.com/apps/news?pid=206...&refer=home Aug. 16 (Bloomberg) -- Dear investor, we'd like to take this opportunity to update you on the recent performance of our hedge fund, Short-Term Capital Mismanagement LLP. As you know, market selection for the entire fund is guided by a proprietary investing tool we like to call ``a dartboard.'' Once the asset classes are decided, individual security selections are generated by digitizing our unique hexagonal cuboid models. Unfortunately, it transpires that our hexagonal cuboids are not as unique as we thought. Hundreds of other hedge funds possess identical dice. The technical term for this is a ``crowded trade.'' You may also see it referred to as ``climbing on a bandwagon already headed for the wall.'' As our alpha generation collapses, our beta has turned negative, our delta hedging has gone toxic and, trust me, you do not want to hear about our gamma. We can't even find our epsilons in the dark with both hands. You will appreciate that accurate pricing is essential for evaluating our investment strategies. This has proven to be extremely challenging in recent days. Previously, we have relied on Bob, the sales guy at Hokey-Cokey Bank. Bob assured us the securities were still worth 100 percent of face value, so everything was cool. Bob sold the collateralized debt obligations to us in the first place, so he knows what he's talking about. Bob, however, appears to have had a nervous breakdown, judging by the maniacal laughter that greeted our requests for price verification this week. Our efforts to implement an in- house CDO valuation framework, using a technique the ancients knew as ``making things up,'' proved unsatisfactory. Where's the Bid? Currently, all of the portfolios we manage are undergoing a rigorous screening known as ``crossing our fingers and praying that we don't have to try and find a bid in the market.'' This is supplemented by a cross-market statistical analysis originally developed by the U.S. military called ``don't ask, don't tell.'' This ``unmarking-to-unmarket'' procedure has been the benchmark for the hedge-fund industry for the past, ooh, 72 hours. We have, of course, been in touch with the rating companies to update our default-probability scenarios, particularly on the AAA rated investments we own. They recommended a forecasting method using stochastics to regress the drift-to-downgrade timescales for the past 100 years and throw them forward for the next five minutes. The technical term for this is ``induction,'' though those of you of a less quantitative bent may know it as ``guessing.'' AAA or Toast? We are pleased to report that, contrary to what current market prices might suggest, all of our top-rated securities remain absolutely AAA. Provided, that is, the future performance of the underlying collateral is identical to its history. Otherwise, the rating companies say our investments are likely to be reclassified as ``toast.'' We have also been checking our back-up credit lines with our friends in the investment-banking world. As soon as they return our calls, we'll be able to update you on our emergency liquidity position. We are sure they are fine. Some of you have written to us asking for your money back, citing clauses in the fund documentation called redemption rights. Frankly, we never expected you to actually read that prospectus, which came prepackaged when we bought the Microsoft Hedge-Fund Guy software. We certainly have no idea what all those long words mean. We have filed your letters in a special drawer in the filing cabinet marked ``trash'' for now. Do you have any idea how much trouble you all would be in if we actually sold this stuff in the market today? At these crazy prices? Fuhgeddaboudit. You'll thank us later. Not a Rescue Speaking of crazy prices, we know you'll be thrilled to learn that we've invited a bunch of our rich pals into the fund to participate in this once-in-a-lifetime opportunity. But this is not a rescue. Do not even think the word rescue. This is an opportunity. Not a rescue. An opportunity. In fact, we think this is such a fantastic opportunity, we've agreed to forgo our usual management fee, and we'll only take half our usual slice of the profits. Provided there are any profits to slice. You, of course, are absolutely invited to participate in this offer by sending us yet more of your money on exactly the same revised terms as our rich pals. Finally, a word for all of you who have been kind enough to inquire about my personal financial situation. I am relieved to report that my directors and officers insurance is fully paid up. Furthermore, my Bentley Continental was paid out of the 2 percent fee we levied when you wrote your first check to us, so I will still be able to trundle into the parking lot each morning in an open-necked shirt to ignore your telephone calls and e-mails. Yours, Hedge-Fund Guy. :-)!!!!!!!
  23. Moin from Geramyn, This could have been a good report from Matthew Lynn .... Could have been..... Too bad that this is the same guy that just 6 month ago wrote this almost comical piece "Mad London House Prices? We've Seen Nothing Yet" with quotes like..... Don't be surprised if the capital's fevered property market doubles in value before this boom runs out of steam ``London and the South East have a lot of catching up to do over the next few years,.....``They have underperformed the rest of the country.'' Well, think again. The latest round of London property inflation has probably only just begun London real estate has lagged behind most of the U.K. for the best part of this decade. And right now it is being revalued. Measured against those sorts of gains, the escalation in London house prices looks relatively calm So make sure that when you see a column from this guy be careful........ :-)
  24. Thanks But it is also true that lots of people are pointing fingers to explain the excess to the new money that foreigners are pumping into the London property market. The majority of foreigners are for sure expatriates that work in London.
  25. Moin from Germany, great Bloomberg article. London is for sure the bubble capitol of the world right now. The "quality of living survey" from Mercer doesn´t help to explain what is going on in London....
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