Joined Feb 3, 2009
1,759 Blog Posts
Market Movers
Trade Balance: Prior # -$40.4b/ Market Expects- $35.5b/ Actual # – $39.9b / Exports Down 6%/ Imports Down 5.5%
The trade report is most widely watched for trends in the overall trade balance. But trends in both exports and imports of goods and services bear watching as well. The export data in particular are important to watch for indications that a strengthening competitive position at home and/or strengthening economies overseas are boosting U.S. growth. Imports provide an indication of domestic demand, but given the severe lag of this report relative to other consumption indicators, it is not particularly valuable for this purpose.
The volatility in the monthly trade balance can play an important role in GDP forecasts. Net exports are a relatively volatile component of GDP, and the trade report provides the only early clues to the net export performance each quarter.
Comments »Being the First Vulture to Eat has Created Problems for Wilbur Ross as Foreclosures hit his Mortgage Servicing Unit
Opportunity early on turns into problems for billionaire Wilbur Ross
Comments »Billionaire Wilbur Ross, who plunged into the mortgage-servicing business with a slew of acquisitions in the past year, is running into problems in a new sign of increasing stress in the business that is on the front line of the U.S. housing crisis.
American Home Mortgage Servicing Inc., an Irving, Texas, company controlled by Mr. Ross’s private-equity firm, W.L. Ross & Co., was sued Tuesday in Connecticut state court by a hedge fund. The lawsuit, filed by Carrington Capital Management LLC, alleges that the servicing unit improperly unleashed a flood of home sales in November and December to help repay $200 million of debt.
American Home Mortgage Chief Executive David M. Friedman said in a statement that the company’s lawyers as of Tuesday afternoon hadn’t verified that the suit was filed in state court or served on the company. Responding to the allegations based on a review of the suit by The Wall Street Journal emailed to American Home, Mr. Friedman said, “the fact-set that you cite is wholly incorrect and misleading and any complaint based on that fact-set is without merit.”
Through a spokesman, Mr. Ross declined comment, referring calls to Mr. Friedman.
The lawsuit helps illustrate the growing influence of mortgage-servicing firms on foreclosures as government regulators try to find ways to halt the liquidations.
Until the downturn in the U.S. housing market, mortgage-servicing firms had inhabited a relatively obscure pocket of the lending industry, handling back-office duties such as collecting mortgage-loan payments, assessing late fees and working with struggling borrowers.
Now, as delinquencies force widespread modifications to loan terms, mortgage servicers are finding themselves increasingly in the spotlight. The industry also includes big banks such as Bank of America Corp. and Wells Fargo & Co. as well as a business owned by Goldman Sachs Group Inc.
IEA Forecasts the Sharpest Drop In Oil Since 1982
Deflation taking its toll on oil
Comments »Demand for oil will fall this year at the fastest rate since 1982, the International Energy Agency has forecast.
The rich countries’ energy think-tank has again cut sharply its prediction for world oil demand this year, and now expects it to average 84.7m barrels per day, down 1m b/d from last year, because of the steep downturn in the world economy.
This year is expected to mark two successive years of falling demand for the first time since 1982-83.
Fuel demand has ”plummeted” in the US and is falling in many other countries, the IEA said. Even in China, one of the countries that powered the global growth in oil demand up to 2007, the rise in consumption is expected to slow sharply.
However, the IEA also warned that sharp production cuts from Opec, the oil producers’ cartel, would mean that by the end of the year there would need to be a ”substantial” draw-down in oil stocks, unless demand weakens even further, or supply from non-Opec countries turns out to be stronger than expected.
Bank of England Running out of Tools. Hinting at Another Interest Rate Cut
Comments »The Bank of England today gave its clearest signal yet that it would need to resort to unconventional measures to fight deflation as it forecast a dismal outlook for the UK economy.
In its quarterly forecast, the Bank predicted that the recession could see the economy shrink by as much as 4 per cent by mid-2009 if rates are not cut further from the already historic low of 1 per cent.
Inflation would fall to as low as 0.5 per cent – far below the Bank’s 2 per cent target – should rates be kept at 1 per cent, according to its report.
But the Bank said the impact of its rate cuts was being “blunted” by the credit crunch and warned that, while rates had not yet reached zero, any further cuts might have minimal impact on the economy.
The report hinted that the Bank’s Monetary Policy Committee might need to use the Government’s asset purchase facility as it runs out of tools to use in the battle against deflation.
Today’s forecast is far worse than the Bank’s outlook in its November report and the prediction for GDP is markedly more pessimistic than the Government’s view for growth this year.
The Bank predicted GDP would plunge sharply this quarter and next, falling as much as 4 per cent year on year.
