Archive for 2011

Public Pension Funds Seek Foreclosure Reviews

Courtesy of Leo Kolivakis

Via Pension Pulse.

Ilaina Jonas of Reuters reports, Public pension funds seek foreclosure reviews:

A coalition of seven major public pension systems, led by New York City Comptroller John Liu, has asked the boards of four of the largest U.S. banks to examine their mortgage and foreclosure practices.

 

In a letter dated January 6, the pension fund coalition urged the Audit Committees of Bank of America Corp, Citigroup Inc, JPMorgan Chase & Co, and Wells Fargo L& Co to launch independent examinations of their loan modification, foreclosure, and securitization policies and procedures.

 

“This will help to prevent future compliance failures and restore the confidence of shareholders, regulators, legislators and mortgage markets participants,” the coalition said in the letter.

 

Bank representatives could not be reached for immediate comment on Sunday.

On January 7, in a decision that could slow foreclosures nationwide, Massachusetts’ highest court voided the seizure of two homes by Wells Fargo & Co and US Bancorp after the banks failed to show they held the mortgages at the time they foreclosed.

 

That sent fears through the market as investors worried that decision could threaten lenders’ ability to work through hundreds of thousands of pending foreclosures.

 

The Supreme Judicial Court of Massachusetts’ unanimous decision upheld a lower court ruling and was among the earliest cases to address the validity of foreclosures done without proper documentation.

 

That issue, including the use of “robo-signers” who approved foreclosure documents without reviewing them, last year prompted an uproar that led lenders such as Bank of America, JPMorgan Chase and Ally Financial Inc to temporarily stop seizing homes.

 

Courts in other U.S. states are considering similar cases, and all 50 state attorneys general are examining whether lenders are forcing people out of their homes improperly.

 

The pension fund coalition represents more than $430 billion in pension fund investments, including $5.7 billion invested in the four banks.

 

Liu represents the five NYC pension funds. The coalition also includes the Connecticut Retirement Plans and Trust Funds, the Illinois State Board of Investment, the Illinois State Universities Retirement System, the New York State Common Retirement Fund, the North Carolina Retirement Systems, and the Oregon Public Employees Retirement Fund.

 

The coalition


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Elizabeth Warren & Bill Maher Discuss Usury And The Credit Card Bill Of Rights

Courtesy of The Daily Bail

Excellent discussion of credit-card abuse of consumers, with some historical quotes thrown in from Maher. 

Dr. Warren explains that we had usury protection in this country until 1979.





Less Than Meets The Eye In Ibanez Foreclosure Case

Courtesy of Tom Lindmark at But Then What 

Lots of doomsday scenarios floating about concerning the Massachusetts Supreme Judicial Court’s decision in US Bank vs Ibanez. Is it all warranted?

First the bare bones. The Court’s decision upheld lower court’s finding that two foreclosures were improper as the banks involved had not proven that they owned the mortgages on the properties. To make matters just a bit more complete, both mortgages had been transferred into mortgage-backed trusts. That pretty much throws all the players who can sue into the pot.

Now the thinking among some is that this could open up the flood gates in as much as the two homeowners in this case get their houses back. Or do they?

Felix Salmon frets that homeowners in Massachusetts who have been foreclosed will begin to challenge the banks and regain their homes.

The legal craziness that this decision sets in motion is going to be huge, I’m sure. Anybody who was foreclosed on in Massachusetts should now be phoning up their lawyer and trying to find out if the foreclosure was illegal. If it was — if there was a break in the chain of title somewhere which meant that the bank didn’t own the mortgage in question — then the borrower should be able to get their deed, and their home, back from the bank. This decision is retroactive, and no one has a clue how many thousands of foreclosures it might cover.

Similarly, if you bought a Massachusetts home out of foreclosure, you should be very worried. You might not have proper title to your home, and you risk losing it to the original owner. It might be worth dusting off your title insurance: you could need it. And if you ever need to sellyour home, well, good luck with that.

Going forwards, every homeowner being foreclosed upon will as a matter of course challenge the banks to prove that they own the mortgage in question. If the bank can’t do that, then the foreclosure proceeding will be tossed out of court. This is likely to slow down foreclosures enormously, as banks ensure that all their legal ducks are in a row before they try to foreclose.

This decision won’t be appealed: the state law seems pretty cut-and-dried, every judge who’s looked at it has come to the same decision, and there’s no conceivable grounds for


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Why Is The US Taxpayer Subsidizing Facebook – And The Next Bubble?

By Simon Johnson at The Baseline Scenario

Goldman Sachs is investing $450 million of its own money in Facebook, at a valuation that implies the social networking company is now worth $50 billion.  Goldman is also apparently launching a fund that will bring its own high net worth clients in as investors for Facebook.

On the face of it, this might just seem like the financial sector doing what it is supposed to – channeling funds into productive enterprise.  The SEC is apparently looking at the way private investors will be involved, but there are some more deeply unsettling factors at work here.

Remember that Goldman Sachs is now a bank holding company – a status it received in September 2008, at the height of the financial crisis, in order to avoid collapse (for the details, see Andrew Ross Sorkin’s blow-by-blow account in Too Big To Fail.)  This means that it has essentially unfettered access to the Federal Reserve’s discount window, i.e., it can borrow against all kinds of assets in its portfolio, effective ensuring it has government-provided liquidity at any time.

Any financial institution with such access to such government support is likely to take on excessive risk – this is the heart of what is commonly referred to as the problem of “moral hazard.”  If you are fully insured against adverse events, you will be less careful. 

Goldman Sachs is undoubtedly too big to fail – in the sense that if it were on the brink of failure now or in the near future, it would receive extraordinary government support and its creditors (at the very least) would be fully protected. In all likelihood, under the current administration and its foreseeable successors, shareholders, executives, and traders would also receive generous help at the moment of duress. No one wants to experience another “Lehman moment.”

This means that cost of funding to Goldman Sachs is cheaper than it would be otherwise – because creditors feel that they have substantial “downside protection” from the government.  How much cheaper is a matter of some controversy, but estimates made by my co-author James Kwak (in a paper presented at a Fordham Law School conference last February) put this at around 50 basis points (0.5 percentage points), for banks with over $100 billion in total assets.

Read the rest of this entry »

Photo: Jr. Deputy Accountant 





The Bill Daley Problem – The Baseline Scenario

Courtesy of Simon Johnson, co-author of 13 Bankers, The Baseline Scenario

Bill Daley, President Obama’s newly appointed chief of staff, is an experienced business executive.  By all accounts, he is decisive, well-organized, and a skilled negotiator.  His appointment, combined with other elements of the White House reshuffle, provides insight into how the president understands our economy – and what is likely to happen over the next couple of years.  This is a serious problem.

This is not a critique from the left or from the right.  The Bill Daley Problem is completely bipartisan – it shows us the White House fails to understand that, at the heart of our economy, we have a huge time bomb. 

Until this week, Bill Daley was on the top operating committee at JP Morgan Chase.  His bank – along with the other largest U.S. banks – have far too little equity and far too much debt relative to that thin level of equity; this makes them highly dangerous from a social point of view.  These banks have captured the hearts and minds of top regulators and most of the political class (across the spectrum), most recently with completely specious arguments about why banks cannot be compelled to operate more safely.  Top bankers, like Mr. Daley’s former colleagues, are intent of becoming more global – despite the fact that (or perhaps because) we cannot handle the failure of massive global banks. 

The system that led to the crisis of 2008, and the recession that has so severely damaged so many Americans, encouraged excessive risk-taking by major private sector financial institutions and, yes, Fannie Mae, Freddie Mac, and other Government Sponsored Enterprises (although these were most definitely not the major drivers of the crisis – see 13 Bankers).

Today’s most dangerous government sponsored enterprises are the largest six bank holding companies: JP Morgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley.  They are undoubtedly too big to fail – if they were on the brink of failure, they would be rescued by the government, in the sense that their creditors would be protected 100 percent.  The market knows this and, as a result, these large institutions can borrow more cheaply than their smaller competitors.  This lets them stay big and – amazingly – get bigger. 

In the latest available data (Q3 of 2010), the big 6


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The Silver Bears Are Back For Round Three, Explaining Two Key Recent Developments In The World Of Silver

Courtesy of Tyler Durden

Confused by the recent downdraft in the price of (paper) silver… Even more confused by what is happening with the record open interest in the metal? Have no fear. The bears are here, and explain things in their traditionally simple and sound effect-filled way.

And for those who are confused by the above, here is another explanation of what may be happening courtesy of a “letter” to Blythe (thanks John).

Blythe,

This is what I am hearing from your former traders (who made “very interesting career decisions”). Well it seem that they are on to a new scheme to corner the Comex and drive the price of silver up $10 to $15 dollars in a matter of weeks.

The strategy is as follows. We know that Comex only has 105 million ounces of silver of which only 50 million ounces are availabe for delivery. (I personally don’t believe the Comex numbers are anywhere near that high, but that is neither here nor there for now.) Well, all it would take is 10,000 contracts on the Comex to buy up all the “available silver” at the Comex and 20,000 contracts to deplete it completely. The current front month March OI is north of 78,000.

Watch the OI closely. Blythe’s former traders are advising major hedgefunds and billioniare investors to buy up as many contracts as possible as March 1 approaches and deposit the cash needed to stand for delivery for the month of March. The purpose is not necessarily to bust the Comex but to force the Comex to pay a premium (some as much as 30 percent) for cash settlement. Think about it. If a group of hedgefund gets together and bankroll $1 billion, they can buy more than 30 million ounces of silver. Of course, the contract sellers like The Morgue cant deliver the silver so a cash settlement is the only recourse. So what’s wrong with $200 million in profit on a $1 billion investment that takes less than 4 weeks total?

Guess what Blythe? Your former traders are advising everyone they know to put on this trade come the first week of February. Is this what happened in the Decemeber contracts? Is this why silver went from $22 on September 30 to $29 by December 1? How much


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The US Will More than Muddle Through

Courtesy of John Mauldin at Thoughts from the Frontline

How Did We Do on 2010? 
Russia and the Roots of World Inflation 
The US Will More than Muddle Through 
December Unemployment Better than Headline 
A Very Fluid Economy 
Cabo, LA, Winnipeg, Meet Me in Vegas, and Thailand

It is time once again to throw caution and wisdom to the wind and actually make my 11th annual forecast. I have to admit this is the most stressful letter I write each year. I do at least 5-10 times more research and thinking about this issue than any other. On a positive note, this may be one of the more optimistic forecast letters I have done in a long time. But there are some asterisks, as always. We will survey the world, trying to peer through the fog of the future. There are some very interesting side trails we will want to explore. Did you know some events in Russia could have real ramifications for inflation in China, the US, and the world? I pay attention to the background details and bring them to you. So settle back as we tour the world.

How Did We Do in 2010?

I rarely go back and read my annual forecast until the following year, and this year was no exception. So I was pleasantly surprised to see that my batting average was pretty good. You can read the first two letters of last January, which comprised the forecast, at http://www.investorsinsight.com/blogs/thoughts_from_the_frontline/archive/2010/01.aspx.

After noting my bearishness on the yen, euro, and pound (against the dollar), I wrote:

“So, where are the strong currencies going forward? The Canadian dollar is on its way to parity. I would want to own the Aussie, if I was a trader. Maybe the Swiss franc, although it is so high on a parity-value basis right now. [Note: if the Swissie was high this time last year, it is wildly overvalued now. And there is nothing the Swiss can seemingly do about it. Their central bank has lost billions trying to fight appreciation against the euro. As Dennis Gartman notes, this fighting the euro may be the all-time largest losing trade in history.]

“But the currency I want the most if I am a central banker [or an individual] is that barbaric yellow relic, gold. Just as India has recently bought 200 tons…
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Full Criminal Complaint And Affidavit In United States Of America vs Jared Lee Loughner

Courtesy of Tyler Durden

The WaPo shares the full criminal complaint with all 5 counts, as well as the affidavit by FBI special agent Tony Taylor which discloses that according to documents seized from 7741 N. Soledad Avenue in Tucson, Arizona, where Lougner resides, that there was an envelope recovered with “handwriting on the envelope stating “I planned ahead,” and “My assassination” and the name “Giffords,” along with what appears to be Loughner’s signature.” There goes the temporary insanity defense.

 





Biggest US Pension Funds Get Into Fraudclosure Fray, Demand Banks “Immediately Examine Foreclosure Practices”

Courtesy of Tyler Durden

More bad news for the BofA/Wells syndicate. After on Friday two of the biggest mortgage lenders in the world were hit with bad news out of the Massachusetts supreme court, today it is seven of the nation’s major pension funds, between them representing nearly half a trillion in capital, which are demanding that “the boards of directors of Bank of America, Citigroup, JP Morgan Chase, and Wells Fargo immediately undertake independent examinations of the banks’ mortgage and foreclosure practices.” The coalition of pension funds called for the banks’ Audit Committees to launch independent examinations of their loan modification, foreclosure, and securitization policies and procedures. “This will help to prevent future compliance failures and restore the confidence of shareholders, regulators, legislators and mortgage markets participants,” the coalition advised in its letter. The coalition members’ insistence on immediate action reflects the urgency of their concerns over mishandled mortgages. But Jim Cramer on Friday said there was no urgency, and no reason to be concerned, and that this is nothing but a buying opportunity for the lemmings which jut got one step closer to the cliff.

Full release from New York City Comtroller John Liu

 

h/t Eric





Weekly Recap, And Upcoming Calendar – All Eyes On Europe

Courtesy of Tyler Durden

Goldma’s FX research team summarizes the events of the week that just passed and looks at the key events in the upcoming 7 days.

Week in review

Markets traded the first week of the New Year with relative optimism--most equity markets around the world ended up for the week. The focus was on the improving US cyclical recovery as ISM (both manufacturing and services) showed robust growth, further fueled by the much higher than expected ADP print mid-week, which in turn raised expectations for the US jobs report on Friday. In the end, payrolls came in weaker than expected and the sharp drop in unemployment rate contained mixed messages as well--about half of it reflecting a drop in the labor force.
 
The theme of a possibly stronger US recovery also reverberated in FX markets. CAD and MXN performed relatively well. Note also that we have revised stronger our MXN and CAD forecasts recently as well as some currencies in NJA including CNY and TWD. Elsewhere, $/JPY ended the week over 2% higher, mainly driven by the mid-week US fixed income sell-off triggered by the ADP print. EUR/$ traded heavily, now back down to almost 1.29 as concerns over European sovereign issues continue to linger.
 
Week ahead
 
US data Keeping track of the pace of US recovery will probably be the main focus of markets. The key US data releases are retail sales, industrial production and CPI, which are all out on Friday. We expect a robust retail sales print for both headline and ex-autos, after the indications from the autos and the same store sales report last week. For CPI (and PPI the day before), we expect a relatively sharp rise on a headline basis, but much more muted gains ex food and energy.
 
Eurozone periphery bond auctions As mentioned, concerns in the Eurozone continue to rumble in the background. The Portuguese and Spanish bond auctions planned for this Wednesday and Thursday respectively will be important to monitor.
 
Central bank meetings We have the ECB, BoE, Korea and Thailand central bank meetings this week. We expect a 25bps hike in Thailand, in-line with consensus. For Korea, we expect a shift to a more hawkish tone, but stopping short of a rate hike. No changes or major surprises are expected from either the ECB or BoE.
 
Monday Jan 10th
 
China trade (Dec) We expect exports growth to…
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ValueWalk

One-eyed Taliban Leader Mullah Omar Is Dead

By Vikas Shukla. Originally published at ValueWalk.

Mullah Omar, the dreaded supreme leader of Afghan Taliban, died two years ago from Tuberculosis, Pakistan told Afghan government officials. Afghan news agency the Khaama Press said Mullah Omar's death was discussed during a meeting of Afghanistan cabinet after Pakistani authorities confirmed the reports.

Though Pak authorities said Mullah Omar died two years ago, they did not provide further details regarding the circumstances surrounding his death. The Afghan Taliban has not officially confirmed the reports, but a representative told BBC News that the militant group would issue a statement shortly. A current council member and a former Afghan Taliban ...



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Phil's Favorites

Sentiment Measures vs. Retail Spending: Clueless Clues and Random Noise

Courtesy of Mish.

Economists Shocked

Economists were shocked by the plunge in the Conference Board Consumer Confidence Index this morning, well below the any economist's guess in Bloomberg's Econoday Forecast.
The consensus estimate was 99.6. The consensus range was 97.0 to 102.0. And the actual result ... 90.9.

Consumer confidence has weakened substantially this month, to 90.9 which is more than 6 points below Econoday's low estimate. Weakness is centered in the expectations component which is down nearly 13 points to 79.9 and reflects sudden pessimism in the jobs outlook where an unusually large percentage, at 20 percent even, see fewer jobs opening up six months from now.

A striking negative in the report is a drop in buying plans for autos which conf...



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Zero Hedge

Drivers, Beware: The Costly, Deadly Dangers Of Traffic Stops In The American Police State

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by John Whitehead via The Rutherford Institute,

“The Fourth Amendment was designed to stand between us and arbitrary governmental authority. For all practical purposes, that shield has been shattered, leaving our liberty and personal integrity subject to the whim of every cop on the beat, trooper on the highway and jail official. The framers would be appalled.”—Herman Schwartz, ...



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Chart School

Relief Rally?

Courtesy of Declan.

Big gains and a strong reversal in the Russell 2000 puts a potential bottom in play.  The Russell 2000 started the day below the 200-day MA, but then rallied to claim a spike low and a close above this key moving average. Small Caps are a key driver in trend cycles. The 'bull trap' from June is still dominant. and a push above 1,280 looks a tall order. but reversing the breakdown of the rising trendline at 1,240 is a different proposition. If it fails at this, then a swift return below the 200-day MA, and then some, opens up. And the long awaited intermediate term decline begins.


The S&P gained over 1% with a second bounce off the 200-d...

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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Dollar gains against yen, but weakens vs. pound (Market Watch)

The dollar advanced against the yen on Tuesday as worries about China’s stock selloff abated somewhat, but the buck fell against the pound after the latest reading on U.K. economic growth matched expectations.

Some stabilization by Asian stocks prompted nervous investors to loosen their grip on the perceived safety of the Japanese currency.

The dollar USDJPY, -0.01%  was up at ¥123.73, compared with ¥123.24 late Monday in New York. ...



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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Kimble Charting Solutions

Travel indicator being put to critical tests

Courtesy of Chris Kimble.

The American Economy is driven a good deal by the consumer.

The table below reflects that nearly 70% of GDP is based consumption.

CLICK ON CHART TO ENLARGE

The 4-pack below looks at consumption with a focus on the travel and leisure sector, by looking at Avis (CAR), Hertz (HTZ), Expedia (EXPE) and Priceline (PCLN).

CLICK ON CHART ABOVE TO ENLARGE

While many seem to be occupied by the news abou...



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Sabrient

Sector Detector: Lackluster earnings reports put eager bulls back into waiting mode

Reminder: Sabrient is available to chat with Members, comments are found below each post.

Courtesy of Sabrient Systems and Gradient Analytics

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then offer up some actionable trading ideas, including a sector rotation strategy using ETFs and an enhanced version using top-ranked stocks from the top-ranked sectors.

Corporate earnings reports have been mixed at best, interspersed with the occasional spectacular report -- primarily from mega-caps like Google (GOOGL), Facebook (FB), or Amazon (AMZN). Some of the bul...



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OpTrader

Swing trading portfolio

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Digital Currencies

Gold Spikes Back Above $1100, Bitcoin Jumps

Courtesy of ZeroHedge. View original post here.

Gold is jumping after the overnight double flash-crash...testing back towards $1100...

Bitcoin is back up to pre-"Greece is Fixed" levels...

Charts: Bloomberg and Bitcoinwisdom

...

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Pharmboy

Baxter's Spinoff

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).

The Baxalta Spinoff

By Ilene with Trevor of Lowenthal Capital Partners and Paul Price

In its recent filing with the SEC, Baxter provides:

“This information statement is being ...



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Mapping The Market

An update on oil proxies

Courtesy of Jean-Luc Saillard

Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself. 

Since...



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Promotions

Watch the Phil Davis Special on Money Talk on BNN TV!

Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene

 

The replay is now available on BNN's website. For the three part series, click on the links below. 

Part 1 is here (discussing the macro outlook for the markets) Part 2 is here. (discussing our main trading strategies) Part 3 is here. (reviewing our pick of th...

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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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