Buzz Bits: Dow and Nasdaq End in the Green
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It's a Bird, it's a Plane! - Todd Harrison - 3:05 p.m.
After a string of successful schnitzels, today's fade of the S&P didn't go my way. You know what? It happens to the best of us. That's why the Trading Gods created stops.
- Some vibage from Jim Rogers on Bear Stearns, the Fed and more.
- You know why today's action is so important? Not only is the S&P double bottom still in place, there's now a higher low to go along with it.
- Yes, there is risk. And it's decidedly two-sided. Hence the Winky Winky Winky (rather than Hefty Hefty Hefty).
- I just got a postcard from the Vet that Zoë is due for her check-up. Ya think?
- Missing Lehman (LEH) by pennies on Monday will go down as one of the greatest missed opps of my career. Even still, those are made up entirely easier than losses.
- One of the greatest Rubyisms of all time is to never speak badly about your competitors.
- Minyans will have the opportunity to toss their hat in the ring to win two tickets to the NCAA Championship in San Antonio later today. Thanks Ben!
- Fare ye well into the bell, Minyans, and let's get this week over and done with already!
Fitch Paints a Bleak Picture - Kevin Depew - 1:15 p.m.
Just listened to the Fitch update on Subprime and Alt-A RMBS this morning. I think it would be fair to say I am a fairly bearish person as far as housing is concerned and tend to harbor a rather negative view about when we might begin to see some stabilization in the market. Let me tell you, that call exceeded even my worst expectations.
The most stunning part was the Fitch update on the roll rate for Subprime mortgages. The roll rate is where performing loans move from current to delinquent. Intuitively, one would expect that as we get further out in time, say 12-18 months, we would begin to see a decline in the roll rate, some positive selection, a survivorship bias. After all, that pool should hold a better overall credit risk borrower since the weakest borrowers and risks will theoretically have already dropped out of the pool and turned delinquent and/or defaulted. Incredibly, what is happening is that the roll rate is actually getting worse.
But let's look on the bright side. This probably is just indicative of the fact that almost all subprime borrowers were poor credit risks, right? No, I don't think so. In fact, I think it's more indicative of a coming acceleration in the deterioration of the overall housing market. The reason can be found in the Alt-A update.
Although non-performance rates for Alt-A borrowers are better than Subprime, naturally, they too are accelerating. Moreover, Fitch says they are seeing deterioration in loan performance for not just the ARM Alt-A loans, but also the fixed loans as well.
That is a significant problem, and I think it's indicative of acceleration and ongoing deterioration as the economy continues to weaken.
Homebuilders ETF Approaching Resistance - Michael Paulenoff - 1:07 p.m.
I need to give you a heads up on the Homebuilders ETF (XHB), which is nearing a confrontation with major resistance between 22.7 and 23.30.
Let's notice that the sharply declining 200 DMA at 23.09 is right in the middle of that range and presents a major test of the bottoming/recovery process in the sector. However, based on my near AND intermediate-term technical work, the XHB will hurdle the above-mentioned resistance zone on the way to 25.00.
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I am Iron Man... - Ryan Krueger - 9:25 a.m.
Companhia Vale do Rio Doce (RIO) announced that it has settled its iron pellet prices that it will receive from one of its largest customers. The much discussed price increase estimates brought consensus for this settlement to about +35%.
With concerns about a global slowdown mounting the steel mills didn't much care for that number. They agreed to pay an increase of +86.67% instead.
The analysts will have to smelt some new estimates going forward.
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