Going To A New Blog Site

Effective today I am moving my blog to another site.  http://wallstreetexaminer.com/blogs/winter/

If you are are regular reader please bookmark it. The Xanga site is marked in the right column there, and will contain all the prior blogs, and will serve as the archive. Additionally my "primer in Winterisms" can be found in the right column there as well.

Which in Turn Crazy Quilt

Some interesting takeaway comments from this Bloomberg article:

-Available money is encouraging “barely profitable and highly risky'’ investments, French Finance Thierryr Thierry Breton said last month.

-Interest rates in the main economies have still not been raised enough,'’ Congdonm Congdon, visiting fellow at the London School of Economics and one of the “wise men'’ who advised the U.K. Treasury in the 1990s. “There is a buoyancy in asset prices one gets with high-risk monetary growth.'’

-President Jean Trichete Trichet said earlier this month that “liquidity in the euro area is ample by all plausible measures'’ and recommended “enhanced monitoring'’ of money-supply growth.

Similar vein:

 Bank of Canada Governor David Dodge told CMHC President Karen Kinsley he was dismayed with a June press release announcing the agency was offering mortgage insurance for interest-only loans and for amortizations of up to 35 years."At a time when the housing market is already overheated, further fuelling demand through CMHC actions would only put further upward pressure on prices and thus make housing less, not more, affordable for Canadians."

This in turn feeds into enormous bonuses and compensation for Pig Men dice roller "talent" on both sides of the Atlantic. It is important to realize that financial asset Bubbles allow fictitious profits and values to be recorded (see yesterday’s post) , that in turn allows the US Treasury to book fictitious tax receipts, which in turn take pressure off of it’s financing needs, and artificially suppresses interest rates.This in turn allows for unrestrained government spending, and military adventurism. It’s very much, the wash, rinse, repeat crazy quilt exercise in action. I very much expect the US Treasury market to collapse along side the demise of the financial sphere, Pig Man Ponzi unit regime. They are directly and intimately linked!!

In the no small surprise department, the SEC is investigating Pig Men activities/manipulation in the US Treasury market.

Evidence continues to mount on job fall out from the real estate situation.

-A slump in the housing industry is prompting Calhoun-based Mohawk Industries to cut jobs, not just on the factory floor, but sales and administrative staff as well. It’s also ramping down production to control inventory levels — particularly carpet for the residential market — by reducing factory shifts.

-Builders received permits for 11,590 homes — including houses, apartments and condos — in September, down 47 percent from 21,717 a year ago, according to the California Building Industry Association.

For those wondering how the US economy maintains as the consumer, and jobs roll over, look no further than the following charts, it can't.:

"Conference Calls": Like Catching a Snake in Tall Grass

Financial entities now seem hard at work inflating earnings via some largely undisclosed version of (problem?) securities sales, and ratcheting  up "fees" to customers. Of course my suspicion is that these transactions are conducted with Enron style off-balance sheet entities, or quasi-related hedge fund operators. But, we aren't going to get even close to that aspect from public information. No sir, not even to first base. Here are some excerpts from the Citigroup conference call.   If you actually listen to the call, the tone of the questions are NOT hostile, but polite.  Given the failure of management to deal with these analysts in a forthright manner, I am amazed at their patience. Think we know the answer why? It's all one big club.

I for one, would like an answer, is that really too much to ask? . Instead management just evades and skirts the answer, via the now epidemic use of the Ministry of Truth technique of a response rather than answer, perfected in a tiring, repetitive manner in our culture by propagandists like Donald Rumsfeld.  For illustration, and in the comfort of your own sanatorium, listen especially to soundbite 5 in the "Rumsfeld soundbite competition".

First, the analyst asks for the amount of the security gain. Finally, after slithering through the grass like a snake by responding about something else, namely "hedging performance" (another can of worms?), the exec gives a half ass response, as opposed to an answer:, coining the vague term "single biggest part" of the $296 million gain is from sale of securities. Hearing this, I wonder why she just doesn't give the number? The analyst asks if the "number" is in "one of the pages". The response is "no", and then Krawchek ignores the followup question, "where can I get it." We then get a direct question about consumer fees, and once again we merely get another response, as opposed to an actual answer.

Webster's definitions:

answer: a correct response to a question      response:  a reply, a rejoiner

Andrew Collins - Piper Jaffray

Real estate lending in the US consumer, there's about $1 billion in revenue there. It was up 20% year over year, 26% linked quarter. I don't know what's going on there, but I'd love any clarity.

Sallie Krawcheck

We had, I think, better hedge performance in the business, as well as we did have some sales of some securities, in the quarter as well.

THEN FROM:
John McDonald - Banc of America Securities

In the US consumer lending segment, you mentioned security gain helping on the sequential revenue growth in non-interest income. Could you tell us how much of the security gains were in there, and what drove that realization of those this quarter?

Sallie Krawcheck

Yes. I think, if you look at it on a sequential basis, I'm just turning to the page. I know we have also got some good head hedge performance, as well. Last quarter on page 14 of the supplement, we had a negative $11.7 million in the net servicing and gain/loss. So we had some hedging effectiveness in that quarter, and then we had a combination of that being more effective, as well as the sale of some securities, as well as better gains on sales of some of the home mortgages that we hold, which really drove that turnaround.

But I wouldn't say, if you eyeball it, the net servicing and gain/loss on sale is a better number this quarter versus the past couple of years. It's not a number that's extraordinarily out of the ordinary.

John McDonald - Banc of America Securities

So the $296 million?

Sallie Krawcheck

I was referring to the net servicing gains and losses that we have, which are on the second page, which is a good chunk of that, again.

John McDonald - Banc of America Securities

The $296 million seems outsized relative to the last couple of quarters, $93 million last quarter and $50 million. I was just wondering if there was some way to quantify how much gains contributed to that, so we can have a sense of the go-forward?

Sallie Krawcheck

The biggest single part of it is going to be the sales of the securities.

John McDonald - Banc of America Securities

Is that on one of the pages?

Sallie Krawcheck

No, it's not.

John McDonald - Banc of America Securities

We can follow up, maybe, and get that?

Sallie Krawcheck

Art stands ready to speak.

My comment: Art, doesn't answer, or indeed even bother to respond, and they immediately move on to next question.

THEN, QUESTION ON CONSUMER FEES:

Mike Mayo - Prudential Equity Group

The fees in US consumer were up $279 million, linked quarter. Otherwise, the spread revenues were down. So it seems like all of the growth has come from fees there. I guess fee revenues in cards were up 11%, linked, even with sales volume down. US consumer lending fees were up threefold. So my question is, are those some of the sales of loans or gains on sale?

Sallie Krawcheck

I think we already talked about consumer lending, right? We talked about some of the hedge performance. I also talked about in US card, the excess servicing, which is driven by very good management of that portfolio by the businesspeople. So I think you've gotten some chunks on what's going on there. But all in all, I think we're pretty happy with how that's evolving.

My comment: Glad you're "happy" with it, Sallie, but no I haven't gotten a good chunk about what's going on, not even close, and to be honest (what a novel concept)  have more unanswered "questions" than ever? On that note enjoy this video presentation.

Reality Food for Thought?

"Carl Jung, remarked that "people cannot stand too much reality." . How true, but we've now reached a new threshold in America, people can't stand ANY reality.

-Wal Mart today said sales at established U.S. stores rose an estimated 0.5%, far off the 2-to-4% gain the company originally forecast for October. Brazil Americans are obviously broke, and it has  to do with soaring costs, as much or more, than their busting housing equity (or negative equities).

-Central banks are now realizing they must take global levels of liquidity seriously, the ECB’s former chief economist, Otmar Issing, said Friday.

‘I am concerned about excessive liquidity in the world.’  This concern is shared by the current members of the ECB’s Governing Council, who have taken the lead in alerting other central banks to the risks at hand,  ‘There is now increasing support of the view that excessive liquidity world-wide is fueling asset prices and is something which has to be taken seriously by central banks…This is a real concern."

-Nadeem Walayak on UK inflation and hyper money supply growth. London is a hot bed for leveraged Ponzi unit financing.

Another major inflationary influence is that the UK money supply is running at 14.5% !! That represents a 16 year high, this alone is alarming and should prompt the BoE to raise interest rates as well as other measures to reduce the money supply growth which unless addressed will cause even higher future inflation.

Stay Calm, All is Well?

Stay calm, all is well. - Kevin Bacon, Animal House

The market acts not just calm/well, but absolutely comatose. To measure just how much so, I'm running two charts courtesy of Contrary Investor. If you are a CI sub, make sure you read their Thursday commentary. The charts speak for themselves. VIX, or volatility, is at a decade and a half low. And not a single 2% down day since 2003, get serious, no wonder there is that sense of a Soviet Union style rig on. Yesterday I posted this at Silicon Investor, as I felt purchasing these puts now represented about as close to a "take a free swing at me, I don't even care"  Animal House attitude from the put sellers as one will ever get. With the USD taking a hard hit against the Yen on this morning's GDP report, I came across an outstanding and timely review of the carry trade situation from Stephanie Pomboy, don't skip this one.

The Ministry Truth recently rolled out the greatest shill, and carnival barker of all time, Alan "Winston" Greenspan for one of those "senile moments". The Maestro declared that "all is now well" on the housing correction.  I thought it might be timely to glean through a variety of very recent (like this week) newspaper accounts from outside the Land of Oz. The price drops now seem to be in waterfall mode, and even the most vivid (or senile?) imaginations could hardly call it stable. The sales slowdown is accelerating as well.

From San Diego County:

The median price last month for newly built houses and condos and condo conversions locally was $413,500, down 17 percent from a year earlier. DataQuick said San Diego County's new-housing total was 885 transactions last month, 37.5 percent lower than in September 2005.

There is very little doubt, that the bursting Bubble is spilling over into big ticket consumption:

For the quarter, new car sales fell 8 percent in total and 12 percent in California, a state that accounts for one-fifth of AutoNation's new vehicle business.

Connecting the dots on this one:

The nationwide car dealer AutoNation Inc. said it expects to slash its orders from the Big Three automakers by 30 percent because of swollen inventories, according to a report published Friday.

From Virginia,

Sales of homes in Virginia slid nearly 27 percent in September, marking the largest percentage drop this year -- and the 13th consecutive month of slower sales. The median price, with half the houses selling for more and half for less, fell 9 percent to $199,975.

From Palm Beach County Florida,

The county's year-over-year median price dropped $34,500 or 9 percent last month to $365,500 from $400,000 in September 2005.  Sales fell a whopping 53 percent in September. There were 566 homes sold last month, down from 1,202 a year ago.

From Southwest, Florida:

* Sarasota-Bradenton saw volume collapse 33 percent, to 436 units. Meanwhile, the median sales price dipped to $290,000, down 16 percent from September 2005, and the biggest price adjustment of any Florida metro area.

* Naples, the state's highest-priced residential market, sustained a 37 percent drop in sales, to 236 houses. Median prices dropped 8 percent, to $446,900.

* Sales of 693 units in Fort Myers-Cape Coral were off 36 percent from September last year. The median price of $261,400 represented a 9 percent drop over the same period.

From Arizona,  we can see from the two charts, that there was a heavy dependence on the construction employment boom, which has now clearly busted. While you're at it, check out the maladjusted nature of the prior job growth. The September waterfall decline in permits, drops the permit line off the attached chart from 2Q. In my Oct. 7 blog, I discussed this condition, as it related to several other key states.

There were 2,281 new-home permits issued in the Valley in September, off nearly 53 percent from the same month last year and the lowest monthly total since December of 2001.