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Home-Purchase Index in U.S. Plunges to Lowest Level Since 2000

The Mortgage Bankers Association’s index of applications to buy a house dropped 12 percent in the week ended Nov. 6 to 220.9, the lowest level since Dec. 2000. The group’s refinancing gauge rose 11 percent as interest rates decreased, pushing the overall index up 3.2 percent.

» TradeBlog [ Contribute: submit link / submit article ]

US Unemployment Rate Rose To 10.2% In October, Highest Rate Since April 1983.

It rose from September's figure of 9.8%. The number of unemployed people rose by 558,000 to 15.7 million.

» TradeBlog [ Contribute: submit link / submit article ]

Dollar Falls as Manufacturing Grows; Oil, Copper, Gold Rally

The dollar slid against high-yielding currencies, led by the Australian dollar, as China reported a surge in manufacturing and investors bet factory production in the U.S. accelerated. Oil, copper and gold climbed.

The so-called Aussie advanced versus 15 of the 16 most- traded currencies as of 10:12 a.m. in London, and the Swedish krona gained against all 16. Oil added 1 percent in New York while copper rose 0.7 percent in London and gold rallied 0.8 percent. Futures on the Standard & Poor’s 500 Index increased 0.7 percent, indicating the benchmark gauge for U.S. equities may rebound from its steepest weekly drop since May.

» Bloomberg [ Contribute: submit link / submit article ]

Roubini Fear: Biggest Co-ordinated Asset Bust Ever

Since March there has been a massive rally in all sorts of risky assets – equities, oil, energy and commodity prices – a narrowing of high-yield and high-grade credit spreads, and an even bigger rally in emerging market asset classes (their stocks, bonds and currencies). At the same time, the dollar has weakened sharply , while government bond yields have gently increased but stayed low and stable.

Let us sum up: traders are borrowing at negative 20 per cent rates to invest on a highly leveraged basis on a mass of risky global assets that are rising in price due to excess liquidity and a massive carry trade. Every investor who plays this risky game looks like a genius – even if they are just riding a huge bubble financed by a large negative cost of borrowing – as the total returns have been in the 50-70 per cent range since March.

» FT [ Contribute: submit link / submit article ]

Dollar Reaches Breaking Point as Banks Shift Reserves

Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades.

Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.

» Bloomberg [ Contribute: submit link / submit article ]

Soros Aims To Invest $1 bln In Green Tech

Billionaire George Soros said on Saturday that he would invest $1 billion in clean energy technology as part of an effort to combat climate change.

The Hungarian-born U.S. investor also announced he would form and fund a new climate policy initiative with $10 million a year for 10 years. "Global warming is a political problem," Soros told a meeting of editors in the Danish capital where governments are scheduled to meet in December to try to hammer out a new global climate agreement to replace the 1997 Kyoto Protocol.

» Reuters [ Contribute: submit link / submit article ]

U.S. Housing Hasn't Bottomed, Prices May Fall 10%

U.S. housing prices may still fall more than 10 per cent, killing an incipient recovery, as demand from first-time home buyers fades, leading economist Nouriel Roubini said Thursday.

Mr. Roubini, one of the few economists who accurately predicted the magnitude of the financial crisis, said massive losses in commercial real estate loans will add to the problem, forcing banks to raise more capital. “The stress is moving from residential mortgages that are still in deep trouble, to commercial real estate, where they are just starting to recognize that they're going to have massive, massive losses,” Mr. Roubini of RGE Global Monitor told reporters after a presentation for a World Economic Forum report on the global financial system.

» The Globe And Mail [ Contribute: submit link / submit article ]

U.S. Jobless Rate May Exceed 6% Until 2013, Poll Shows

The worst recession since the Great Depression has left a scorched landscape that will weigh on the labor market and the broader economy for years to come, according to economists in the latest Wall Street Journal forecasting survey.

The 48 surveyed economists expect the economy to bounce back from four quarters of contraction with 3.1% growth in gross domestic product at a seasonally adjusted annual rate in the just-ended third quarter. Expansion is seen continuing through the first half of 2010, though at a slower rate. But the massive downturn means the labor market will take years to heal. On average, the economists don't expect unemployment to fall below 6% until 2013; unemployment hit 9.8% in September.

» WSJ [ Contribute: submit link / submit article ]

Thirty-Year Mortgage Rates Drop to Near-Record 4.87%

Mortgage rates for 30-year fixed U.S. home loans fell for the second consecutive week, pushing borrowing costs to near record lows.

The average U.S. 30-year rate dropped to 4.87 percent from 4.94 percent last week. The 15-year rate was 4.33 percent, mortgage buyer Freddie Mac of McLean, Virginia, said today in a statement.

Falling rates helped boost home-loan applications last week to the highest level since May. The Mortgage Bankers Association’s index of applications to purchase a home or refinance rose 16 percent. Rates around 5 percent, slumping home prices and a government tax credit for first-time homebuyers are bolstering demand for housing.

» Bloomberg [ Contribute: submit link / submit article ]

Unemployment Becoming Leading Indicator for Pimco’s New Normal

Mohamed El-Erian says economists are wrong to dismiss unemployment as merely a lagging indicator, a sign of where the economy has been. For the chief executive officer of Pacific Investment Management Co., the 26-year high jobless rate is also an omen of things to come.

“Today’s unemployment rate is much more than a lagging indicator,” said El-Erian, whose Newport, California-based Pimco manages the world’s largest bond fund, in an e-mail after the Labor Department report on Oct. 2. “It is also a signal of future pressures on consumption, housing and the country’s social safety net.”

» Bloomberg [ Contribute: submit link / submit article ]

More US jobs lost than expected

The US economy lost 263,000 jobs in September, which was more than had been expected, according to official non-farm payrolls figures. The jobless rate rose to a fresh 26-year high of 9.8% from August's figure of 9.7%. The number in employment has now fallen for 21 consecutive months.

There was more bad news from the Labor Department, which revised its figures for July and August to show 13,000 more jobs lost than previously reported. The economy as a whole is expected to have grown in the past three months, but recovery in the jobs market tends to lag behind the rest of the economy.

» BBC [ Contribute: submit link / submit article ]

Sanofi-Aventis Study: HIV Vaccine Shows Promise for First Time

An experimental vaccine prevented HIV infections for the first time, a breakthrough that has eluded scientists for a quarter century.

A U.S.-funded study involving more than 16,000 volunteers in Thailand found that a combination of ALVAC, made by Paris- based Sanofi-Aventis SA, and AIDSVAX, from VaxGen Inc., of South San Francisco, cut infections by 31.2 percent in the people who received it compared with those on a placebo, scientists said today in Bangkok. Neither vaccine had stopped the virus that causes AIDS when tested separately in previous studies.

[ PDF ] Sanofi-Aventis Press Release

Obama Says Financial Regulations Must Be Strengthened Globally

President Barack Obama said tougher financial regulations are needed worldwide to protect consumers, provide economic stability and prevent future crises.

» Bloomberg [ Contribute: submit link / submit article ]

Leading Senator Pushes New Plan to Oversee Banks

The senior Senate Democrat shepherding legislation to overhaul the nation’s financial system is planning to propose the merger of four bank agencies into one super-regulator, an idea that is significantly different from what President Obama envisions.

“We clearly need to put in place an architecture that restores confidence and makes people feel that when they engage in financial activities, from making a bank deposit to buying insurance or investing in stock, that they can have confidence in the system,” Mr. Dodd said in an interview on Friday. “On the other side of this, I don’t want to strangle business.”

» New York Times [ Contribute: submit link / submit article ]

It's Business as Usual Again for Wall Street's Casino Capitalists

One year after the bankruptcy of US investment bank Lehman Brothers, governments are divided over what lessons should be learned from the crisis. But the more the economy recovers, the less desire there is to implement radical reforms -- and many bankers have already returned to their old casino capitalism ways.

» Spiegel [ Contribute: submit link / submit article ]

Hedge Fund Liquidations Decline

The number of hedge fund liquidations declined in the second quarter, as gains in the industry picked up pace, according to Hedge Fund Research Inc.

» Trade Blog [ Contribute: submit link / submit article ]

U.S. Proposes Ban on Flash Trading

The S.E.C. on Thursday proposed banning what are known as flash orders, which use powerful computers to glimpse at investors’ orders. The practice is often associated with a controversial corner of finance called high-frequency trading, which has grown, largely hidden from view, into a potent force in the markets.

The proposed ban was announced on the same day that the S.E.C. put forward new rules for credit ratings agencies, which were widely criticized for their role in the financial crisis, The Times writes. Together, the moves telegraphed a tougher line from the commission after a series of prominent missteps, including its failure to spot the Ponzi scheme orchestrated by Bernard L. Madoff.

» NY Times [ Contribute: submit link / submit article ]

Stiglitz Says Banking Problems Are Now Bigger Than Pre-Lehman

Joseph Stiglitz, the Nobel Prize- winning economist, said the U.S. has failed to fix the underlying problems of its banking system after the credit crunch and the collapse of Lehman Brothers Holdings Inc.

“In the U.S. and many other countries, the too-big-to-fail banks have become even bigger,” Stiglitz said in an interview today in Paris. “The problems are worse than they were in 2007 before the crisis.”

» Bloomberg [ Contribute: submit link / submit article ]

White House Econ Advisor: High Unemployment For Years To Come

The president’s chief economic adviser warned Friday that the nation’s unemployment rate could stay “unacceptably high” for years to come — a situation that would seriously complicate Barack Obama’s ability to convince Americans that he’s beating back the recession.

“The level of unemployment is unacceptably high,” National Economic Council Director Larry Summers said Friday. “And will, by all forecasts, remain unacceptably high for a number of years.”

Summers’ comments came in a briefing with reporters ahead of Obama’s speech in New York City on Monday, marking the one-year anniversary of the collapse of Lehman Brothers, an event widely regarded as having created a panic that caused the global economic meltdown.

» Politco [ Contribute: submit link / submit article ]

Double-Dip Recession Still A Risk, Nouriel Roubini's Financial Times Interview

Economist Nouriel Roubini, the president of RGE Monitor who's often referred to as "Dr. Doom," recently sat down with Martin Wolf of The Financial Times, and said that the world faces a "rising risk" of a double-dip recession.

Earlier this year, he warned of a "perfect storm of rising oil prices, rising taxes and rising nominal and real interest rates on the public debt of many advanced economies."

In his interview with The Financial Times, Roubini was similarly pessimistic:

"I do agree with the consensus that we'll have a couple of quarters of strong economic growth. The question is whether the medium-term growth is going to be V-shaped a return to potential or anemic growth below potential. My view of it is that it's going to be anemic."

» Financial Times [ Contribute: submit link / submit article ]

Credit Card Companies Dodge Reform With New Fees

Companies have already rethought rates. Under the new law, issuers can't raise them without 45 days' notice. But there's a loophole: The rules don't apply to variable-rate cards, with rates that float up and down. That's why companies are moving more consumers into such cards, whose rates are likely to soar from their record lows. Researcher Bankrate.com (RATE) estimates variable-rate cards will account for 75% of all cards this year, up from 65% in 2008.

Fees have been another area of focus. Starting in February, lenders won't be able to charge consumers a penalty when they go over their credit limit. To make up for the lost revenue, issuers are coming up with a host of other penalties. Fifth Third Bank (FITB) started levying a $19 tariff if a borrower doesn't use the card for 12 months. Notes a Fifth Third spokeswoman: "The fee is used to encourage active use of accounts and to offset the increasing costs of accounts."

» Busness Week [ Contribute: submit link / submit article ]

The Next Financial Crisis. It's coming--and we just made it worse.

To many observers, the Federal Reserve has never looked more heroic than it does right now. This past winter, America’s financial system faced the prospect of utter ruin. And, while the economy has suffered plenty in 2009, the worst did not come to pass. The banking system that lends to our employers, thereby allowing our economy to function, never did collapse. Now, many of the accolades for averting catastrophe are going to the Fed. President Obama himself ratified this analysis last week when he renominated Fed chairman Ben Bernanke for a second term. Bernanke, the president told reporters, had marshaled “his background, his temperament, his courage, and his creativity” to help prevent a second Great Depression.

» New Republic [ Contribute: submit link / submit article ]

JOBLESS RATE HITS 9.7%

Employers cut 216,000 from payrolls, fewer than forecast, after a 276,000 drop in July that was larger than previously reported, Labor Department data showed today in Washington. The jobless rate jumped to 9.7 percent from 9.4 percent.

» TradeBlog [ Contribute: submit link / submit article ]

Maybe It’s Time to Change Credit Cards

On Thursday, the first of a set of new rules went into effect resulting from the landmark credit card legislation earlier this year.

Banks must now provide written notice to customers 45 days before increasing the interest rate or changing the terms on a card. So banks raced to get out in front of that requirement, making a bunch of changes before Thursday, lest they have to give you a month and a half of warning.

Irritated by the changes? Inclined to take your business elsewhere now? This is exactly the right instinct, since plenty of people can still get a better deal from a different card. Fee-free balance transfers still exist. And banks have barely touched the most lucrative rewards programs — and wouldn’t dare fiddle too much given the revenue they generate.

The best revenge is a better card. Here’s how to find one.

» NY Times [ Contribute: submit link / submit article ]

Dow Soars Over 100 Points After July Home Sales Numbers

Existing-home sales surged 7.2 percent to a 5.24 million annual pace, the highest jump since August 2007. Economists had expected a rise of just 2.2 percent. Home sales were up 5 percent year over year. It was the fourth straight month sales have risen.

» CNBC [ Contribute: submit link / submit article ]

Toxic Loans Topping 5% May Push 150 Banks to Point of No Return

More than 150 publicly traded U.S. lenders own nonperforming loans that equal 5 percent or more of their holdings, a level that former regulators say can wipe out a bank’s equity and threaten its survival.

» Bloomberg [ Contribute: submit link / submit article ]

The Reuters/University of Michigan preliminary index of consumer sentiment decreased to 63.2 from 66 in July.

The measure reached a three-decade low of 55.3 in November.

Geithner: "We Won't Let" Wall Street Return To Old Habits

"I don't think the financial system is reverting to past practice, and we won't let that happen," Mr. Geithner said. "The big banks are running with much less leverage now, much more conservative liquidity cushions, there's been a significant shrinking of their balance sheets, getting rid of bad assets and cleaning up. And the weakest parts of the system don't exist anymore."

» WSJ [ Contribute: submit link / submit article ]

RBS - Fresh alert on global stock markets

RBS uber-bear issues fresh alert on global stock markets. Three-month slide could hit record lows, Royal Bank of Scotland chief credit strategist Bob Janjuah predicts.

Britain's Uber-bear is growling again. After predicting a torrid "relief rally" over the early summer, Bob Janjuah at Royal Bank of Scotland is advising clients to take profits in global equity and commodity markets and prepare for another storm as winter nears. "We are now in the middle of a parabolic spike up," he said in his latest confidential note to clients.

» telegraph.co.uk [ Contribute: submit link / submit article ]

Names Of Americans Using Swiss Bank Accounts To Evade Taxes To Be Released

The Swiss and U.S. governments announced a deal Wednesday to settle American demands for the identities of suspected tax dodgers, despite Switzerland's vaunted bank secrecy. But they kept all details under wraps, including how many of the 52,000 names sought by the IRS from banking giant UBS AG will be revealed.

» Huffington Post [ Contribute: submit link / submit article ]

Read it quick: this article will self-destruct in eight hours.

Computing and communicating through the Web makes it virtually impossible to leave the past behind. College Facebook posts or pictures can resurface during a job interview; a lost or stolen laptop can expose personal photos or messages; or a legal investigation can subpoena the entire contents of a home or work computer, uncovering incriminating or just embarrassing details from the past.

Vanish is a research system designed to give users control over the lifetime of personal data stored on the web or in the cloud. Specifically, all copies of Vanish encrypted data — even archived or cached copies — will become permanently unreadable at a specific time, without any action on the part of the user or any third party or centralized service.

For example, using the Firefox Vanish plugin, a user can create an email, a Google Doc document, a Facebook message, or a blog comment — specifying that the document or message should "vanish" in 8 hours. Before that 8-hour timeout expires, anyone who has access to the data can read it; however after that timer expires, nobody can read that web content — not the user, not Google, not Facebook, not a hacker who breaks into the cloud service, and not even someone who obtains a warrant for that data. That data — regardless of where stored or archived prior to the timeout — simply self-destructs and becomes permanently unreadable.

» Vanish / Washington edu [ Contribute: submit link / submit article ]

U.S. Enters Recovery as Stimulus Refutes Skeptics

Recovery from the worst recession since the 1930s has begun as President Barack Obama’s fiscal stimulus -- derided as insufficient and budget-busting months ago -- takes effect, a survey of economists indicated.

The economy will expand 2 percent or more in four straight quarters through June, the first such streak in more than four years, according to the median of 53 forecasts in the monthly Bloomberg News survey. Analysts lifted their estimate for the third quarter by 1.2 percentage points compared with July, the biggest such boost in surveys dating from May 2003.

» Bloomberg [ Contribute: submit link / submit article ]

Durable Goods Orders Fell 2.5% In June...

...much larger than the 0.6% slip economists expected.

» Trade Blog [ Contribute: submit link / submit article ]

Are We Better off Because of the Stimulus

For weeks on end, Republicans have pounded home the message that economic stimulus has failed. (Charles Krauthammer: “[Obama] blew a hole in the budget that is a trillion dollars wide. There is nothing to show for it.”) Polls show that most people think the stimulus has done nothing to help so far. But today’s second quarter GDP data show that the stimulus has actually helped quite a bit.

» New Republic [ Contribute: submit link / submit article ]

Obama Says U.S. Has ‘Many More Months’ Before Full Recovery

President Barack Obama said it will take “many more months” for the U.S. to fully recover from the recession as employers continue to shed jobs. (Snip) “As far as I’m concerned, we will not have a recovery as long as we keep losing jobs,” Obama said. “And I won’t rest until every American who wants a job can find one.” The GDP report is a “an important sign that we’re headed in the right direction” as business investment stabilizes,

» Bloomberg [ Contribute: submit link / submit article ]

Venture Capital Firms Plan New Funds, Survey Shows

Although the venture capital industry is having a hard time convincing endowments, pension funds and other limited partners to invest new capital in the asset class, the majority of venture firms still plan to raise a new fund in the next 12 months - if a new survey from Pepperdeine University is to be believed.

» WSJ [ Contribute: submit link / submit article ]

Dollar Falls to 2009 Low as Economic View Reduces Safety Demand

The Dollar Index, which the ICE uses to track the dollar against currencies including the yen, pound and Swedish krona, fell as much as 0.4 percent to 78.315, the lowest level since Dec. 18, and was at 78.509 at 7:30 a.m. in New York, compared with 78.626 yesterday. The euro advanced 0.2 percent to $1.4256 per euro, from $1.4232. The 16-nation currency traded in a range of $1.3833 to today’s high of $1.4304 in July.

» Bloomberg [ Contribute: submit link / submit article ]

Sour Loans Surge on Main Street

Records obtained under the federal Freedom of Information Act show the public is paying to offset bank losses on small business loans across the country, from a convenience story in the tiny Canadian border town of Houlton, Maine, to a graphic arts design company on the island of Hawaii, more than 5,000 miles away.

"This could be the first economic recovery we've seen in a long time that hits small business the hardest the longest," he said. The Small Business Administration purchased $2.1 billion in bad loans from lenders last year. Agency officials say it's likely that this year will see another high as the recession nears the two-year mark.

» CNBC [ Contribute: submit link / submit article ]

Geithner urges end to ‘dumb regulation’

Tim Geithner, Treasury secretary, said there was “a lot of dumb regulation in our country” and urged lawmakers to enact quickly the administration’s plan to reform the system, in spite of resistance from the financial industry and other regulators. “Every financial crisis of the last generation has sparked some effort at reform, but past attempts began too late, after the will to act had subsided,” he told the House financial services committee, which will start drawing up legislation in September. “That cannot happen this time.”

» FT [ Contribute: submit link / submit article ]

Podcast: Value investing versus 'buy and hold'

David Stevenson, the FT's Adventurous Investor, asks City analysts James Montier, Albert Edwards and Tim Bond about the best strategies for long-term shareholders

[ MP3 ] Value investing versus 'buy and hold' Part 1
[ MP3 ] Value investing versus 'buy and hold' Part 2

Stock Traders Find Speed Pays, in Milliseconds

It is the hot new thing on Wall Street, a way for a handful of traders to master the stock market, peek at investors’ orders and, critics say, even subtly manipulate share prices. It is called high-frequency trading — and it is suddenly one of the most talked-about and mysterious forces in the markets.

» The New York Times [ Contribute: submit link / submit article ]