Posts Tagged ‘option arm’

What is the Main Cause of Residential Foreclosures?

Welcome George!

What is the Main Cause of Residential Foreclosures?

Courtesy of Washington’s Blog

The foreclosure problem in American is not just subprime mortgages. True, banks have been holding on to their foreclosed properties for months, but now they’re getting ready to release them onto the market, which could depress prices for existing homeowners, further driving them underwater. But that’s not what I’m talking about.

There are huge tidal waves of defaults on option arm, alt-a, and other types of loans coming (see this and this).

But even that is arguably not the main problem.

Perhaps the biggest problem is that the crash in real estate and rising unemployment together form a negative feedback loop. As McClatchy and the Associated Press note, foreclosures rise as jobs and income drop.

As former chief IMF economist Simon Johnson points out, there is a vicious cycle also exists between unemployment and property foreclosures:

Unemployment is always a lagging indicator, and given the record low number of average hours worked, it will turn around especially slowly this time. Until then, people will continue to lose their jobs and wages will remain flat, and any small rebound in housing prices is unlikely to help more than a few people refinance their way out of unaffordable mortgages. So unless the other part of the equation – monthly payments – changes, the number of foreclosures should just continue to rise.

Indeed, the Washington Post notes:

The country’s growing unemployment is overtaking subprime mortgages as the main driver of foreclosures, according to bankers and economists, threatening to send even higher the number of borrowers who will lose their homes and making the foreclosure crisis far more complicated to unwind.

And see this.

Some economists give 5% as the magic number: when unemployment declines to 5%, then unemployment will no longer be such a huge contributor to foreclosures.

But Moody’s forecasts that unemployment will not go back down to 5% until 2014.

Similarly, the the chief economist for the U.S. Chamber of Commerce – Martin Regalia – "thinks that it could be five years before the U.S. economy generates enough jobs to overcome those lost and to employ the new workers entering the labor force", according to McClatchy.

Indeed, unemployment could be a problem for many years to come.

 


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Phil's Favorites

China's long-term problems are forcing it to rethink the whole economy

 

China’s long-term problems are forcing it to rethink the whole economy

Stuck in first gear. Yannes Kiefer/Unsplash

Courtesy of Kent Matthews, Cardiff University

The People’s Bank of China is encouraging Chinese banks to lend more to businesses and consumers by cutting the proportion of deposits that they have to hold as reserves by 0.5 ...



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Politics

China's long-term problems are forcing it to rethink the whole economy

 

China’s long-term problems are forcing it to rethink the whole economy

Stuck in first gear. Yannes Kiefer/Unsplash

Courtesy of Kent Matthews, Cardiff University

The People’s Bank of China is encouraging Chinese banks to lend more to businesses and consumers by cutting the proportion of deposits that they have to hold as reserves by 0.5 ...



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Zero Hedge

UK Joins US, AUS In Diplomatic Boycott Of China's Winter Olympics

Courtesy of ZeroHedge View original post here.

The UK joins an expanding list of countries that have imposed a diplomatic boycott of the Winter Olympics in Beijing over human-rights abuses in China, according to NYTimes

"There will effectively be a diplomatic boycott of the Winter Olympics in Beijing," Prime Minister Boris Johnson said Wednesday. The UK joins the US, Australia, Lithuania, and New Zealand in banning top officials from attending the Winter Games.

Johnson said the UK has "n...



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Biotech/COVID-19

Antibiotic resistance is at a crisis point - government support for academia and Big Pharma to find new drugs could help defeat superbugs

 

Antibiotic resistance is at a crisis point – government support for academia and Big Pharma to find new drugs could help defeat superbugs

Bacteria that are resistant to every available antibiotic in the U.S. already exist. Rodolfo Parulan Jr/Moment via Getty Images

Courtesy of Andre Hudson, Rochester Institute of Technology

Antibiotic resistance poses one of the most important health challenges of the 21st century. And time has already run out to stop its dire consequences.

The rise of ...



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Chart School

US Reserve Asset vs Gold and Silver

Courtesy of Read the Ticker

Gold and silver move relative to US interest rates and the US Dollar.

So lets use a custom index of US dollar and US 10 yr interest rates and see what happens.


shrink










NOTE: Posts here are the lite version, more depth on each subject can be found via our RTT Plus membership.

Changes in the world is the source of all market moves, to catch and ride the change we believe a combination of ...

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Digital Currencies

Stablecoins: these cryptocurrencies threaten the financial system, but no one is getting to grips with them

 

Stablecoins: these cryptocurrencies threaten the financial system, but no one is getting to grips with them

Safe as houses? iQoncept

Courtesy of Jean-Philippe Serbera, Sheffield Hallam University

Cryptocurrencies have had an exceptional year, reaching a combined value of more than US$3 trillion (£2.2 trillion) for the first time in November. The market seems to have benefited from the public having tim...



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Promotions

Phil's Interview on Options Trading with TD Bank

TD Bank's host Bryan Rogers interviewed Phil on June 10 as part of TD's Options Education Month. If you missed the program, be sure to watch the video below. It should be required viewing for anyone trading or thinking about trading using options. 

Watch here:

TD's webinar with Phil (link) or right here at PSW

Screenshots of TD's slides illustrating Phil's examples:

 

 

&n...



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Kimble Charting Solutions

Crude Oil Cleared For Blast Off On This Dual Breakout?

Courtesy of Chris Kimble

Is Crude Oil about to blast off and hit much higher prices? It might be worth being aware of what could be taking place this month in this important commodity!

Crude Oil has created lower highs over the past 13-years, since peaking back in 2008, along line (1).

It created a “Double Top at (2), then it proceeded to decline more than 60% in four months.

The countertrend rally in Crude Oil has it attempting to break above its 13-year falling resistance as well as its double top at (3).

A successful breakout at (3) would suggest Crude Oil is about to mo...



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ValueWalk

Managing Investments As A Charity Or Nonprofit

By Anna Peel. Originally published at ValueWalk.

Maintaining financial viability is a constant challenge for charities and nonprofit organizations.

Q4 2020 hedge fund letters, conferences and more

The past year has underscored that challenge. The pandemic has not just affected investment returns – it’s also had serious implications for charitable activities and the ability to fundraise. For some organizations, it’s even raised doubts about whether they can continue to operate.

Finding ways to generate long-term, sustainable returns for ...



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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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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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