On Monday, Moody’s released a report that loan charge-offs suffered by U.S. banks are greater than those endured during the early years of the Great Depression.  During 2009, uncollectable loans have topped $116 billion or 2.9% of all outstanding loans.  As unemployment numbers continue to mount, loans failures will continue to rise.  Today, the Labor Department announced that another 520,000 Americans filed for new unemployment benefits last week.

While third quarter earnings reported by big banks were surprisingly robust, the gains appear the result of cutbacks and trimming rather than increased growth.  “We believe earnings prospects for the fourth quarter of 2009 and for 2010 are bleak for many U.S. banks,” said Moody’s.

Meanwhile, European Central Bank Governor, Christian Noyer, warned that banks are continuing with their risky lending practices and are pointed to a certain complacency throughout global markets to reign in the culprits.  Noyer voiced his belief that financial gains were provided by public initiatives and that as some stability was restored to the marketplace, regulators have dropped the reform ball.

“There are signs that parts of the financial industry have resumed risk taking practices reminiscent of those which led to the crisis,” said Noyer.  “We do not know what kind of financial system will emerge from this crisis.  We need to think about this.”  The Governor pointed to the recent revelation that Goldman Sachs has recently set aside $16.8 billion in employee bonuses.

Noyer’s concerns were supported by the Bank of Canada whose Governor, Mark Carney, voiced strong support for controlling bonuses and the use of these proceeds to bolster cash reserves in order to spur lending.

“Current bumper profits can compensate employees, be returned to shareholders, or increase capital.  The clear priority of the pubic sector is the re-capitalization of the financial system to expand credit formation,” offered Carney.  Banks should once again become the “servants of the real economy rather than the apex of the economic activity.”

Obama, Geithner, Bernanke, Bair, Frank Push Reform

They may not agree on much and there appears to be a bit of a power struggle among the regulators but all agree reform is necessary.  It is unclear exactly how the main reform agencies will align but President Obama’s directive to Representative Frank makes it clear that, “No financial system can work effectively if financial institutions and investors operate with the belief that the government will act to protect them from the consequences of their failures.”

Obama and Frank have been structuring the reforms that will lead to the dismantling of “too big to fail” institutions.  “It is very important that we reach agreement on comprehensive reforms as soon as possible so that we can restore confidence among American taxpayers and the world. We cannot meet these tests with a set of small changes,” the President said.

Frank’s bill would allow the Federal Reserve to limit exposures, block acquisitions, restrict pay and bonuses and even empower the Fed to order bankruptcy at financial holding companies.  Additionally, the FDIC authority would allow Bair’s agency to extend Treasury Department credit to solvent banks and non-bank financial firms to prevent financial instability.

Losses by the FDIC would need to be repaid by “assessments on large financial companies” and not by taxpayers, who are unhappy about their exposure with poorly run, high-risk taking firms like AIG, Citigroup and Bank of America.  The reality is that taxpayers have kept these firms in business, as well as Goldman Sachs.  Yet, these companies continue to pay unwarranted bonuses while 10% of the American workforce is unemployed, losing their homes and defaulting on credit obligations.

Frank’s bill would place Treasury Secretary Timothy Geithner at the chair of the newly structured Financial Services Oversight Committee.  This committee is the culmination of months of positioning for a centralized regulatory agency.

The cycle is real, vicious and dangerous.  Reform legislation is squarely based on the actions that caused the recession and the need for taxpayer assistance.  At the core of this remedy is the belief that the taxpayer cannot tolerate any further burden for irresponsible lending practices and high-risk policies that generated huge bonuses but toppled the financial system.

When Congress and taxpayers are continually slapped in the face with AIG and Goldman bonuses as 106 banks have failed in 2009, a line has appeared in the sand.  What is clear is that the financials will not alter their modus operendae until legislative action is taken.

The FDIC’s staff was trimmed from 21,000 employees to 6,000 during the Bush presidency.  Meanwhile the agency’s capital funding is sorely depleted.  Bair is patiently waiting much needed new funding derived from pre-paid member dues and Obama Administration-approved staff increases.  The fund replenishment and increased examiner body count will enable even more aggressive shuttering of troubled lending institutions.

This weekend’s closings included: 

• Flagship National Bank ($175 million) – Bradenton, Florida – assets now managed by First Federal Bank of Florida

• Partners Bank ($64.9 million) – Naples, Florida – assets now managed by Stonegate Bank in Fort Lauderdale

• Hillcrest Bank Florida ($84 million) – assets managed by Stonegate Bank in Fort Lauderdale

• American United Bank ($101 million) – Lawrenceville, Georgia – assets now managed by American Bank of Moultrie, Georgia

• Riverview Community Bank – Otsgeo, Minnesota – assets now managed by Central Bank

• Bank of Elmwood – Racine, Wisconsin – assets now managed by Tri City National Bank of Oak Creek, Wisconsin

• First Dupage Bank – Westmont Illinois – assets now managed by First Midwest Bank of Ithasca, Illinois

 Closings Are Expensive

Typically, bank failures cost the FDIC between 25 and 30% of the bank’s total assets.  The weekend failures cost the FDIC approximately $357 million.  The agency projects that bank failures will cost the FDIC a stunning $100 billion from 2009 – 2013.

The FDIC has clearly pointed to commercial real estate investment failures as the dominant factor in the downfall of community banks.  Banks with less than $10 billion in totals assets tend to be heavily vested in commercial real estate ventures where the smaller banks were able to successfully compete with larger institutions for loans.  While bigger banks also have commercial loans, they tend to represent a smaller percentage of their overall portfolio.

The 106 closings this year mark the first time more than 100 banks have been closed in a single year since 1992.  In 1989, during the savings and loan debacle, a record 531 banks were closed.  The 2009 total would be immeasurably higher than the current tally if the FDIC had available funding and an adequate number of examiners to meet the crises.

While many investors and economists have concentrated on the residential housing woes of the recession, Chairman Bair is clearly more focused on commercial real estate (CRE).  “The most prominent area of risk for rising credit losses at FDIC insured institutions during the next several quarters is in CRE lending,” Bair told the Senate subcommittee on financial institutions.

As commercial loans approach renewal dates, hotels, malls and condominium financing remain in jeopardy.  Filled with unoccupied space and dwindling property values that are 35 – 40% less than originally appraised, many of these entities are underwater and non-performing.  Active commercial real estate loans now total more than $1 trillion or 14.2% of all loans and leases in the banking industry. 

Since 2007, U.S. lenders have endured about $1.1 trillion in credit losses and write-downs.  The process of closing these banks and clearing out the distressed assets is a painful but necessary step in the overall restoration of the American banking system.

Gerard Cassidy, an analyst with RBC Capital Markets of Portland, Maine, offered the following analysis; “We certainly know there are hundreds and hundreds of zombie banks out there.  The only alternative for them is to be seized and it’s only a matter of manpower and money before they get to it.  It’s very painful, it costs a lot of money, it ruins careers, but shutting down failed banks and writing off the bad loans is a necessary solution that has to be done to get the economy and the banking system back on its feet.”

A new initiative will encourage lending institutions to recognize potential losses in their commercial real estate portfolios while not renewing the losses awaiting loss recognition.  The guiding principle is to clear the decks of troubled assets as soon as possible.  Meanwhile, Chairman Bair’s steadfast apolitical approach to the banking crises is gaining momentum and restoring credibility to the nation’s financial institutions.

Economic Pessimism

Pure fundamental reasoning for the recent downturn has some in the market convinced that further dollar weakness is sure to come.  Although the European economy is down in the dumps as well, the masses seem to be focusing on the growing twin deficits currently held by the U.S.  The same concerns helped to support a higher Euro valuation just five years ago, when estimates had calculated a fiscal shortfall of $700 billion.  Chump change to what experts are now shuddering at when considering the plethora of programs that have been approved by the current administration.  Participants of the era will also scarcely remember falling employment as well.  All in all, current budget deficits will have to be funded by an increasing number of Treasury debt issuance, adding to an already bloated credit bill that is surely to decrease the confidence in U.S. based debt.

Carry Trade Bandwagon

It used to be the Japanese yen that was the butt of all carry trades in the last two to three years.  However, now it seems that the greenback is the funding currency of choice.  It makes perfect sense as the Federal Reserve has made significant cuts to the benchmark interest rates over the last 20 months in order to accommodate the underlying credit markets.  But at what cost?  With benchmark rates at the record low of 0.25 percent, traders will continue to sell the U.S. dollar short, helping out the Euro.  Making it even worse is the fact that U.S. rates aren’t expected to be raised until after all of the other G7 central banks have their turn.  Although expectations were hovering around a 40 percent chance of a 25 basis point increase by the Fed in the fourth quarter, those estimates have dwindled and placed a higher likelihood of that happening at the tailend of the first half 2010.

Dollar Doldrums: Central Banks Want Out

Additionally, central banks have played their part in rumors and threats as entities in all parts of the world have begun to talk the dollar down.  Earlier this summer, BRIC nations complained about their exposure to the dollar with Russia leading the way for a supranational currency or preferential trading of special drawing rights backed by the World Bank.  All of this talk of currency conversion has done nothing but increase already nascent speculation that a massive Euro conversion may happen as nations attempt to diversify out of U.S. dollar based assets.  This is of particular interest as three of the five aforementioned nations have risen up the currency reserve ladder (#1 China, #3 Russia, #5 India), with the fourth (#8 Brazil) not too far behind.  As long as there remains the underlying discomfort between the greenback and these nations, there will be a supported preference for anything other than U.S. currency.

The Monkey Wrench

Given the recent facts and trends, Euro strength looks to be here to stay.  Even if European Central Bank President Jean Claude Trichet begins his dutiful jawboning of the detrimental effects of a stronger currency, speculators are likely to keep pressing the currency higher.  The only caveat seems to be in the form of an earlier economic assessment of the Euro region.  Given the fact that interest rates remained relatively high in the area, economic growth may be slow to come.  The slower growth will likely keep European nations behind the current recovery and force policy makers to drag heels when it comes to raising rates in the near future.  Should this economic stalling actually take place, the current euro momentum may be placed in jeopardy.

According to this morning’s Bank of England minutes, central bankers voted unanimously to hold interest rates at a record low of 0.5 percent.  As “recent developments were not sufficiently compelling to justify” a change in current monetary policy, the BoE saw nothing in justifying any rate increases as well as an expansion of the Quantitative Easing program.  The plan is currently set at 175 billion pounds.  Although the report was stable and expected, any further momentum higher in the currency will likely be dependant on the November 5^th meeting.  During this time, central bankers will review growth forecasts in order to better assess the current economic situation.  Forecasters have already noted that the UK economy may have very well exited the recession back in the third quarter with a 0.7 percent tick higher.  However, any visible weakness in the GDP figure may prompt another 25 billion pound increase in the asset purchase program, giving the underlying pound a bearish tone.

Notably, Governor Mervyn King was quoted in an individual article saying that interest rates in the U.K. will likely rise in the future “at some point”.  He also cautioned that “it would be wise to take this into account”.  Not only does this signal a potential shift in monetary policy, but also a shift in personal attitude as it seems that the UK monetary authority may see some signs of a stable economic foundation.  The statement also helps to fodder a sentiment that interest rates may be set to rise in the broader market, leaving the U.S. as the last player that will consider the option.  On this ticket, the British pound skyrocketed higher from the 1.6384 close yesterday in New York, to trade as high 1.6598.  Although a medium term pullback is highly likely, the sentiment may give plenty of support for anti-dollar buying throughout the day.

How has the NFAs role in foreign exchange trading evolved over the last 10 years?

It has been only since Congress passed the Commodity Futures Modernization Act of 2000 that NFA has been actively involved in the regulation of retail off-exchange foreign currency trading. That legislation required any firm acting as a counterparty to retail forex trading to be an “otherwise regulated entity” (i.e., a bank, insurance company, broker-dealer or futures commission merchant). Many forex firms chose to register with the CFTC as FCMs and become Members of NFA. It was at that time that we developed a new category of membership – Forex Dealer Members. Since then, we have developed a series of rules and interpretive notices that govern many areas of a Forex Dealer Member’s business activities.

Can you explain new regulatory changes,particularly those surrounding stops and limits.

I think the best explanation for our recent rules regarding certain trading strategies (e.g., so-called “hedging”) is the rule submission letter we sent to the CFTC. Use this link to read it: http://www.nfa.futures.org/news/PDF/CFTC/CR2_43_ForexPriceAdj_112408.pdf

How have recent NFA changes impacted retail forex trading?

We receive data on a weekly basis from our Forex Dealer Members regarding the amount of customer funds they currently hold. Since our latest rules went into effect on August 1, we have seen a minimal (4%) decline in customer funds at our 17 Forex Dealer Members.

Are there any regulatory changes on the immediate or not so immediate horizon?

There are no major regulatory changes from NFA in the near future. However, it’s important to remember that the CFTC Reauthorization Bill of 2008 gave the CFTC anti-fraud authority over forex firms. That means that all forex fund managers, pool operators, introducing brokers and their associated persons will be required to register with the CFTC and, most likely, become Members of NFA. Because the CFTC has not published its forex rules yet, it’s difficult to say what the impact will be on the forex industry.

How do you suggest a perspective retail forex trader research potential firms to trade with?

Since most U.S. forex firms are registered with the CFTC and Members of NFA, one of the first things a prospective forex trader should do is visit NFA’s website (www.nfa.futures.org) and conduct a background check. By accessing NFA’s Background Affiliation Status Information Center (BASIC), you can find out how long the firm has been registered, who the principals of the firm are, whether the firm has been the subject of any NFA disciplinary actions and other pertinent information.

How important is net excel capital in regards to a potential FCM?

In 2007, NFA President Dan Roth testified at a hearing before the Subcommittee on General Farm Commodities and Risk Management Committee on Agriculture regarding the need for a higher minimum capital requirement for forex dealers. He stated, “The second trait that marks the problem firms in retail forex is that most, though not all, have been thinly capitalized. Congress long ago recognized that acting as a dealer involves greater risk than acting as an agent in futures trading, the way a traditional FCM does. That is why Congress in 1978 imposed a $5 million net worth requirement for firms granting dealer options and why the CFTC created a $2.5 million capital requirement for leverage transaction merchants in 1984. Congress should amend Section 2(c) of the Act to require FCMs acting as counterparties to retail forex transactions to maintain minimum capital of at least $20 million. NFA has raised the capital requirements for forex dealers several times but this congressional action could ensure that firms can meet their obligations to their customers and have a significant financial stake in their business.” Subsequently, the CFTC Reauthorization Act of 2008 imposed a $20 million capital requirement on retail forex counterparties that are Retail Foreign Exchange Dealers or that are FCM-only firms primarily or substantially engaged in on-exchange futures activities. Following the requirements outlined in the legislation, NFA amended its Financial Requirements to increase Forex Dealer Member capital requirements to $20 million, on a gradual basis, by May 16, 2009.

Would you recommend spot fx through a registered FCM or fx options through an exchange like the CME to a new trader?

Pages 10-11 of NFA’s brochure, “Trading in the Retail Off-Exchange Foreign Currency Market – What Investors Need to Know,” explains the differences in trading off-exchange forex and on-exchange foreign currency futures and options contracts.

Are there any resources you can suggest to someone who is interested in learning more about retail foreign exchange trading?

NFA does not make specific recommendations regarding forex educational materials. However, we strongly encourage potential forex traders to get as much information and training as possible before actually opening an account.

What does it taking to become a registered FCM and an NFA approved member?

Our website has an extensive section related to the registration process. Click here for a summary of FCM registration issues.

What oversight is there for registered members?

Our Forex Dealer Members are subject to a set of rules that cover every aspect of their business, including sales practices, promotional material and anti-money laundering programs. They are subject to periodic audits and examinations. As mentioned earlier, our Forex Dealer Members are also required to submit weekly financial reports.

Is there anything else you would like to add?

I have nothing more to add other than reiterating that prospective forex traders should do as much research as they can into the firm they are considering opening an account with. They should also learn as much as they can about how the forex markets work and the risks involved in trading forex.

Larry Dyekman is the Director of Communications and Education for National Futures Association. He is responsible for all external and internal NFA communications as well as educational materials for NFA Members and the investing public. He has developed regulatory guides for NFA Members, educational brochures for futures investors, video programs describing NFA’s corporate mission and multimedia programs to help train NFA arbitrators. He is a graduate of Illinois State University and a member of the International Association of Business Communicators.

On Wednesday  “JPMorgan set a high bar; a bar that is tough to beat for other banks,” said Tim Ghriskey of Solaris Asset Management.  Investors agreed that the 10,000 threshold might be difficult to sustain.  Goldman’s stellar earnings are tempered by public opinion polls that question the company’s bonus policies. 

In the wake of the fact that Goldman needed $10 billion of taxpayer support and collected another $10 billion from the taxpayer’s bailout of AIG, struggling consumers are not accepting the company’s proposed average $660,000 per employee bonus plan. 

Goldman CEO, Lloyd Blankfein, has been under fire to justify the bonus payments.  Rolling Stone magazine labeled the company, “the vampire squid wrapped around the face of humanity.”  Hundreds of organizations have pushed the company to temper the bonus plan and make substantial charitable donations.

On Thursday, Blankfein announced a $200 million contribution to Goldman’s charitable organization.  At the same time, the CEO defended the company’s bonus plans, citing the efforts and successes of the organization.  The Goldman Sachs bonus pool is on pace to top $20 billion in 2009.  Blankfein’s ability to explain that bonuses consist of a mixture of stock and cash may be key to how then public views Goldman.  At best, there is a large amount of skepticism surrounding the lack of transparency in both the Goldman and Citigroup releases.

As Congress appears set to approve regulation, Wall Street compensation policies will take center stage for the next few weeks.  A return to pre-recession compensation policies is largely unacceptable.

Unemployment Lower, But…

Applications for new unemployment claims fell by 10,000 for the week ended October 10, 2209.  The 514,000 figure marks the lowest number of new claims in the past nine months.  The number of persons collecting long-term unemployment benefits was trimmed by 75,000 as the number of recipients fell below the 6 million mark. 

Analysts suspect both numbers are somewhat tainted.  The long-term benefit shaving could well represent the expiration of term rather than an employment improvement.  Analysts also suggest that the lowering of initial claims merely reflects a bottom of the market.  Simply, there are not many jobs left to trim.

The 10,000 DOW mark presents a serious psychological threshold.  The recovery seems fueled by government and not by production.  Companies have trimmed spending, including employment, and been permitted previously non-existent latitudes with mark-to-market accounting that has enabled profits to rise. The real question centers around sustainability.

There is plenty of hype surrounding the economy’s performance, but how real can a recovery be that has consumers reeling, housing tumbling and employment dwindling?

Equifax Check In  

While Goldman Sachs contemplates how to disburse $20 billion in bonuses, one of the nation’s largest credit reporting agencies reported how the taxpayers are doing.  It is not pretty.  The people that were asked to keep Goldman Sachs afloat are in dire straits.

7.65% of American homeowners are 30 days delinquent on their mortgages.  41.36% of those notorious subprime mortgages are delinquent.  The shadow inventory of bank-owned residences is overstocked and slowly entering the marketplace pushing prices lower. 

Home equity loans and auto loan delinquencies are abnormally high.  Credit card delinquencies have stabilized.  This oddity is attributed to the high interest rates associated with the cards and with the fact that Americans are preserving their charge cards in case of emergencies.

Student loan applications are at their highest level with demand up 15%.  Students are staying in school longer and working part-time to help foot the bills.  Student loan delinquencies have not faltered like other credit markets.

According to Equifax, the American consume is now delinquent on multiple credit advances.  In the past, the consumer was likely to default on one segment. 

This concern was echoed by Citigroup, who was successful in overseas markets, but suffered big losses in American credit markets.  The American consumer has trimmed debt by 3.8% or $440 billion in year-over-year comparisons.  Meanwhile, the consumer has increased savings to 3.71%, well above the 2008 mark of 1.30%.

For the time being, Bair has spurred government assistance in her attempts to keep her ailing banks and cash strapped FDIC afloat.  Her innovative request to the nation’s bankers that they prepay three years of FDIC fees will add $39 billion to the agency’s dwindling coiffures.  Bair has the authority and has reserved her right to tap a $100 billion credit line at Treasury but has chosen to keep that option as an action of last resort.

At the rate the country’s banks are tumbling, that day may come sooner rather than later.  The FDIC is fast approaching 100 bank takeovers since the recession began.  At the close of September, banks held $1.7 trillion in commercial real estate loans and the industry is struggling under the weight of high vacancy rates and declining values.

In an interview with CNBC in advance of her appearance before the Senate Banking Committee, Bair shared her assessment of the industry and trajectory of the banking recovery.  In her candid revelations, the relationships between the FDIC, the Treasury, the Federal Reserve and the Obama Administration appeared strained.

Bair Tests Bernanke and Geithner 

Tension reached a high point between Bernanke, Geithner and Bair when the FDIC declined Citi’s application for registration with the FDIC.  Bair saw the handwriting on the wall with Citi and rejected consideration, an action that prompted a heated response from Geithner.  Three months later, Bair looks like a hero as Citi heads down the road to bankruptcy court.

Additional pressure has come from the handling of TARP funds, which many members of Congress feel should be used for the intended purpose of removing toxic assets from the banking system.  As such, these funds would be moved from the Treasury’s control to Bair’s FDIC.

Bair’s initiative to boost her depleted cash reserves is typical of her creative alternatives to taxpayer assistance.  Bair recently launched another initiative to assist troubled homeowners.  She prompted the 55 banks under FDIC control to extend forbearance programs to unemployed homeowners who had current status prior to unemployment.  The program would allow the homeowner six months to find employment before payments would have to resume.

Bair seemed pleased with he test-sample Legacy Loan Program, which placed numerous toxic assets on the market.  The program recouped $0.71 on the dollar and Bair seemed content with the results.  The implication is that the value of toxic assets could be far less and that an orderly liquidation process is necessary.  Bair would like to be involved.

Saving The FDIC

Some on Capitol Hill have pushed for a reduction in the FDIC’s role suggesting that the creation of a new, central regulatory agency would make the FDIC unnecessary.  Bair has voiced strong opposition to this proposal and insists that while the Fed, Treasury and FDIC have their differences, they also have areas of overlapping agreement.

Bair proposes that the three main existing regulatory bodies remain in tact but with more defined spheres of influence.  She has pushed Congress for clarity. 

In her Tuesday interview, Bair was guarded regarding the fate of the troubled agricultural banks and the beleaguered commercial banks.  For the most part, these banks face the unenviable position of being small enough to fail.  In the current climate, that is a bad place to be. 

Citing that baking is a lagging indicator, Bair stated that failures will continue to occur through the end of 2010.  With just $40 billion on hand, Sheila Bair may have to continue her creative solutions very quickly.

Now granted, this figure does not guarantee every employee that works at the bulge bracket bank this amount.  However, it does raise some eyebrows when considering the institution borrowed taxpayer funds in order to buffer itself from one of the worst financial crises in history.  Even more patronizing are the rumors that have suggested a $1 billion charitable donation by the investment bank.  The idea is enough to draw attention from the bonus hoopla – if only temporarily.

Nonetheless, Wall Street bonuses are set to rise at a time when unemployment has risen to double digit figures and productivity has slowed to a crawl.  How can this be?

• Bonuses for 2009 are expected to be higher due to lower bonuses offered to top players in 2008.  Companies involved in the last year’s meltdown were unlikely to pay high bonuses due to the wrangling that went on at the end of the year.  Now with the structures back in place and institutions on the mend, management is set to offer payouts which are going to be higher than last year.  For the record, compensation in 2008 was approximately 10 percent less than in 2007.

• Bonus structures have been revamped to accommodate the individual rather than the department.  As a result, higher payouts are likely required in order for groups to retain top talent.  Should an individual see a rather unappreciative boss, they may be more inclined to switch – taking their business down the street or overseas.

• Growth has been extraordinarily rich for the surviving investment banks.  With some earnings being boosted by recent acquisitions (Bank of America/Merrill Lynch and JP Morgan Chase/Bear Stearns), firm revenues are expected to be supported well past 2007’s big numbers.  A record $345 billion was recorded by Wall Street firms.  The number is being compared to this year’s figures for total revenue – which are already expected to come in at the high end of $440 billion.

However, all this talk may be for nothing as most of the recently printed figures are all estimations and hearsay.  The biggest consideration of all may come in the form of an announcement by Kenneth Feinberg this week.  The Pay Czar is schedule to issue statements on compensation packages at seven financial firms that receive federal funding, including well known bulge bracket banks.  Should compensation cause Feinberg to step back a little, be sure that the current administration will have something to say about it.

What remains worrisome is the current trend of a strong underlying Loonie.  The greenback has already lost close to 20 percent against the Canadian counter since the end of March 2009.  Further appreciation in the currency may choke off early signs of growth as well cause further damage to expansionary possibilities in the medium term.  Nonetheless, speculators will likely toss aside recent comments as prospects for the CAD continue rise, a trend that has been preferred since the summer months.