ValuePlays

Hosuing, Bankruptcy, Harvard, Fat Pitch

– 10 cities bucking the trend

– This is big news folks

– Agreed

– Great job George

Disclosure (“none” means no position):

Have been tracking the jobs information since last August. Three categories are paramount for me. Non-farm payrolls (the total), private and government. What interests me the most of the three is not the total number each month of job declines but the percentage change that number represents from the total employed the month before.

Why? If we have a firm that employees 10 people and lay off one, we have laid of 10% of the workforce. If we double employment to 20, then lay of 2, we have still laid off 10% BUT, people would also be accurate in saying “layoffs have increased 100% (from 1 to 2)”. In this case, simply looking at the total number skews reality. For that reason I want to know what percent of the total who had a job the month before lost it. Then I want to know how that percentage is trending. I also want to know this for the private sector and government.

Here is the datat from the (BLS all numbers seasonally adjusted where applicable):

The number do show an improvement in the rate of decline since the Dec./Jan. highs.

The key point to note is the April numbers. Without the highly abnormal hiring done by the government (72k jobs for temporary census workers), the improvement in April would have been roughly halved. Noting that does place a large dose of doubt as the the “improvement” in the job situation. May estimates are for -532k non-farm job loses in May (to be released 6/5).

My thought is that number is too low. I think -575k or greater is more likely unless the government hired another 72k people like it did in April. Assuming the government employment changes are normalized, then I think a spike is in order…

Again, what is of more importance is how government hiring effects this number and does the rate of decline in private sector jobs abate. True growth will only come from the private sector. Government can only grow payrolls and pay for them either through increased borrowings or increase takings of private capital (taxes). Neither is conducive to growth. We cannot keep losing a greater percentage of private jobs that the overall picture would lead us to believe and hope the economy improves soon.

That also goes to earnings. Q2’s earnings were better than many of the reduced expectations. BUT, it was not due to top line sales growth but increase cost cutting (jobs). If we have sales declining but cut costs ahead of them, then we can improve the earnings picture. Now, this is not to say this is a bad thing, but it is reality.

Disclosure (“none” means no position):

For those who do not wish to peruse the whole presentation (your insane if you do not) there are two slide that bear a close watch. The whole sub-prime has been exhausted. It is the Alt-A mortgage storm that is the cause of then next wave down.

What is an Alt-A loan? Current slang terms for them are “liar loans”, “no doc”, “teaser”, “pick a pay” etc. In short, these loans, whose use exploded in 2005-2008 and the next bane of housing’s existence. The largest problem comes from the resets over the next 2-3 years. These are loans that allowed the payee to “pick a payment”. They could choose the full payment, interest only, or the “minimum”. The minimum choice then allowed the bank to add the rest of what would have been a full payment onto the existing loan which caused it to “negatively amortize” or grow larger rather than shrink over times.

After a preset period, usually 3-5 years, the loans “reset” with a new payment (no more pick a pay) based on current interest rates and a current loan amount. Do we think folks who paid less than the full payment before will now be able to afford a new, far higher amount on a home worth less than the loan? Me either.

So the question then is, when do they reset? How much more pain is in store?

The next question is, “how big is this market”?

Yeah, big…

Please check out the presentation especially if you are either think of buying or selling a home. It may save you a fortune on either side…

T2 Partners Presentation on the Mortgage Crisis-4!3!09 3

Disclosure (“none” means no position):none

Moore, Bloggers, Reich, Leftist

– Don’t get the joy here

– This is exciting news

– Even the home team is turning on the administration

– It is funny how definitions change over time

Disclosure (“none” means no position):

Funny, Newspaper, Horror, WTF???

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Disclosure (“none” means no position):

We all know how reliable these tend to be…not very. But, if you are an investor in oil or gas, you will want to know what is being said. It has been a few years since we have had a significant storm so I think it may tend to be “more likely than not” we see something this year..

I am long both natural gas (UNG) and oil (USO) through both the ETF’s and options in them.

Disclosure (“none” means no position):

Here is the original post from 12/26/2008

Zell makes some interesting comments on commercial real estate (CRE).

“Well, there’s been a lot of speculation and a lot of journalists have written about the impending demise of commercial real estate,” he said. “First of all, I think that the fact that interest rates are as low as they are means that even if people are under water in commercial real estate, they still can carry it. And if you’re under water and you can carry it, the last thing you’re going to do is sell it, because you don’t get anything.”
“So therefore, that’s why we have no transactions,” he said. “And I think it’s going to take two or three years before we start seeing that happen.”

While I wholly disagree with Zell on residential real estate (RRE), on the CRE side, his comments do make a level of practical sense. While it is true that there will be a few implosions, a housing style bust may not be in the offing. A simple reason may be the string of payments. Unlike a homeowner who loses their job then their home, the owner of CRE has a buffer. First the rents of the tenants pay the loans, and only when they are not enough to cover, do the owner then dip into their own pockets.

In short, the risk/payment responsibility is dispersed among several parties. Again, this is not to say that there will not be defaults, many of them or that REIT’s will not suffer, it is just the widespread and pervasive losses we are seeing in RRE may not be in the cards (losses here are defined foreclosures on CRE).

Disclosure (“none” means no position):

This is a long read but a must read none-the-less.

Robert Rodriquez

Disclosure (“none” means no position):

For those thinking we have enough oil and gas, you may want to take a gander at the data Mr. Simmons has put together. I am solidly in the “there is not enough” camp.

When do we feel the pain of that? We’ll, consider two successive quarters of -6% GDP growth in the US (and a third that looks only marginally better), the consumer of 25% of all the World’s energy and we still have $66 a barrel oil (USO). What happens to the price of oil when we actually begin to grow? $90?? $100??? $150??

Please take a close look at this…

Simmons “Two Oxymorons: Energy Independece, Security”

Disclosure (“none” means no position):

Lifelock, Onion, GM, Murder

– Just do not get this one

– Why do they not have a regular TV gig?

– Finally….done

– This will be turned by the media into the “mainstream”….

Disclosure (“none” means no position):

Asset Growth & Stock Price

Disclosure (“none” means no position):