immobilienblasen

That´s What Is Happening When You Outbid A SWF......Hapag-Lloyd Said To Seek As Much As $2.4 Billion In Capital

2009-07-09T00:15:00.000-07:00

No problem with overbidding NOL ( Temasek ) but when your consortium is in part backed by the taxpayer ( City Hamburg & HSH Nordbank ) it is getting "annoying"....Especially when the taxpayer had already to bail out HSH Nordbank with well over € 10 billion ( and counting / see States agree €13bn HSH bail-out ).... Will be interesting to see how long the public will tolerate this form of "patriotism" or should i better say "protectionism"....

Maybe some of the officials were blinded with the success in former interventions (Beiersdorf/Procter&Gamble and Norddeutsche Affinerie/A-Tec).... France must be jealous.......... :-)

Grundsätzlich sind Übernahmen die massivst überbezahlt sind nicht weiter verwerflich...... Anders sieht es da aus wenn das Konsortium das den "Mondpreis" bezahlt hat zu nicht unwesentlichen Teilen der öffentlichen Hand ( Stadt Hamburg & HSH Nordbank ) zuzuordnen ist...... Ganz abgesehen davon das die HSH Nordbank bereits mit etlichen Mrd € ( siehe States agree €13bn HSH bail-out ) von den Steuerzahlern gestützt werden mußte....... Hier eine mehr als gelungene extra3 - Chronologie HSH Nordbank GENIAL :-)

Denke das diese Art des Patriotismus und der Standortpolitik ( evtl. sind die Erinnerungen an früher erfolgreich geschlagene "Schlachten" wie Beiersdorf/Procter&Gamble bzw. Norddeutsche Affinierie/A-Tec noch zu gut in Erinnerung) doch gewaltig aus dem Ruder gelaufen ist...... Böse Zungen könnten hier auch von Protektionismus sprechen...... Da könnte sogar Frankreich neidisch werden... :-)

Flashback October 2008

Rückblende Oktober 2008

TUI Sells Hapag-Lloyd Unit in 4.45 Billion-Euro Deal

Oct. 12 (Bloomberg) -- TUI AG, the German owner of Europe's largest travel company, agreed to sell Hapag-Lloyd to a Hamburg- based investor group in a deal that values the shipping company at 4.45 billion euros ($6 billion).

The Hamburg group, led by the city's government and logistics billionaire Klaus-Michael Kuehne, was the sole remaining bidder after Neptune Orient Lines Ltd. ( Temasek Holdings - the investment arm of the Singapore Government - is the largest single shareholder with a 68% holding ) dropped out on Oct. 10. TUI initiated the sale in March, giving in to investor pressure to focus on tourism.

The investor group, called Albert Ballin KG after a famous Hamburg ship owner, bid for the company to secure jobs and an important part of the city's maritime history. The group consists of the city of Hamburg (Hamburg alone has a holding of about 23 percent), Kuehne, private investment bank M.M. Warburg & Co., regional bank HSH Nordbank AG, and insurers Signal Iduna and Hanse Merkur.

Fast forward to today........

Nun zu der heutigen Schlagzeile.......

Hapag-Lloyd Said to Seek Up to $2.4 Billion Capital

July 9 (Bloomberg) -- Hapag-Lloyd AG, Germany’s largest container shipping line, is seeking as much as 1.75 billion euros ($2.4 billion) in capital from lenders and shareholders including TUI AG, two people familiar with the matter said

German banks will be asked to provide a 1 billion-euro loan backed by the federal government, one of the people said. TUI would shoulder 325 million euros and Albert Ballin 425 million euros, the person said. The Hamburg city, part of Albert Ballin, would pay 170 million euros, according to the person.

Doubling down.......Another interesting part is that TUI is still owning over 40 percent and has given Hapag-Lloyd significant credit lines.....The FTD has an estimate of only € 400 Million. According to Manager Magazin & TUI Deal Presentation ( Page 11) it is closer to € 1.4 Billion......

Hört sich für mich ganz nach "verbilligen" an......Interessant ist zudem das TUI immer noch über 40% an der Reederei hält und Hapag-Lloyd zudem nach der FDT mit 400 Mio € an Kreditlinien versorgt hat ( siehe auch Hapag-Lloyd braucht Milliardenhilfe ).Gemäß dem Manager Magazin ( siehe Hapag-Lloyd in schwerer See ) und der TUI Deal Präsentation ( Seite 11 ) vom Februar sind es sogar 1,4 Mrd €. Hier mehr vom Handelsblatt Notruf in stürmischer See

Needless to say that TUI is already rated at JUNK...... I´ll bet that they already regret that they haven´t sold to Temasek......

Brauche wohl nicht weiter erwähnen das TUI selbstredend seit Jahren mit JUNK geratet wird....... Bin mir sicher das die es bereits bitter bereuen nicht an Temasek verkauft zu haben.....

Corporate Rating

	Corporate Rating	Ausblick
Standard & Poor´s	B+	negativ
Moody´s	B2	negativ

Here is more on on the outlook for the shipping and container business...........

Hier mehr zum trüben Ausblick für die Containerbranche.........

Trade Update: Container Shipping "A Black Hole of Losses" Naked Capitalism

Cargo ships will carry 27 million fewer containers by year's end than they did in 2008 -- a reduction roughly equivalent to all of the cargo containers handled by the five busiest U.S. seaports in a typical year, according to London-based Drewry Shipping Consultants' Container Forecaster Report.

"There has never been a decline like this before. We have never seen numbers like these," said Neil Dekker, editor of the Drewry report. "The container industry is looking at a $20-billion black hole of losses. We can expect a lot of casualties."...

FT Alphaville

Market imbalances are in our view aggravated by the large newbuilding orderbook across most segments. These vessels will be delivered during difficult market conditions with most having been ordered at high rices. All shipping sectors will likely be affected by the high prices paid for newbuildings in recent years.

By our reckoning, these vessels will, on average, have to earn high freight rates to cover their purchase price and operating costs. With freight rates now very low in some segments, vessel operators look likely to incur substantial losses.
Consequently, we expect that the downturn for shipping will be severe and prolonged. We expect some relief on supply-side pressure, however, to come from widespread newbuilding cancellations or deferrals, and subsequent bankruptcies at weaker shipyards or cancellation of new ‘greenfield’ shipyard projects, primarily in China. We believe this is most likely to affect deliveries in 2011 and 2012
A sudden ratcheting upwards of the risk profile of these portfolios, which is what S&P expects, could mean a quadrupling in demand for regulatory capital under Basel II - quite a significant increase, particularly in these strained times.

The orderbook/current fleet ratio is indeed "stunning"......

Das Verhältnis Orderbuch im Verhältnis zur aktuellen Flotte ist in der Tat "atemberaubend"......

I´ll finish with one HSH Nordbank figure ......

Abschließend eine wenig beruhigende HSH Nordbank Zahl

Shipping lending represents 7.4x HSH Nordbank’s equity at end 2007

There is a good chance that large party of the shipping financing arm will be "outsorced" to a Bad Bank.....

Bin mir sicher das große Teile der Schiffsfinanzierungen demnächst in einer eigens dafür gegründeden Bad Bank landen werden.....

This Can´t Be Good News For The Cash Flow.........

2009-07-08T03:12:00.000-07:00

Maybe i´m reading too much into the "Accounts Receivable to Sales Ratio" but the following number is sounding at least to me a bit "elevated". Unfortunately i have no historical or geographical comparisons to put the latest number into perspective. But in the face of a long and very deep recession/depression & spiking bankruptcies my comon sense tells me this is worrisome and i assume that this isn´t a German "phenomenon".....

Für mich erschenit diese Nummer beunruhigend hoch. Leider habe ich keinerlei historischen bzw. geographischen Vergleichswert um die Zahl ins Verhältnis zu setzen. Mein gesunder Menschenverstand sagt mir aber das dies im Angesicht einer langen Rezession/Depression und explodierenden Insolvenzen Grund zur Besorgnis ist. Bin mir ebenfalls zeimlich sicher das diese Thematik kein rein deutsches Phänomen ist..... Erneut dickes Kompliment an das Handelsblatt

One fith of the top listed German companies have receivables outstanding greater than 20 percent of their revenue
Click here to see the details

Konzerne steuern auf gefährliche Engpässe zu Handelsblatt

Akuter Auftragsmangel, immer schwächere Mittelzuflüsse aus dem operativen Geschäft und wachsende Refinanzierungsnöte stellen die führenden deutschen Konzerne vor wachsende Herausforderungen

Bereits ein Fünftel der untersuchten Unternehmen hatte Ende 2008 mehr als 20 Prozent ausstehende Forderungen, gemessen am Gesamtumsatz

> Für zum Teil recht überraschende Details hier der Handelsblatt Bilanzcheck

Darunter waren der Pharmakonzern Merck, der Energieversorger RWE und der Lkw-Hersteller MAN - Unternehmen, die ihren Kunden in normalen Zeiten keine Zahlungsziele einräumen. Und in der Rezession wächst die Gefahr, dass Forderungen komplett ausfallen

Die meisten Konzerne sind finanziell gut gepolstert ins Krisenjahr 2009 gestartet. Nur 60 Prozent betrug im Schnitt die Fremdkapitalquote. Laut Bundesbank war die deutsche Industrie Mitte der neunziger Jahre mit 84 Prozent Fremdkapital erheblich höher verschuldet

> Denke das Argument zieht besonders nach Betrachtung der bisherigen Goodwillhandhabung nicht mehr sonderlich.....

Auch Oliver-Wyman-Experte Kautzsch identifiziert weitere Risikopotenziale: "Möglicherweise haben einige Unternehmen ihren Kunden sehr lange Zahlungsziele gewährt in der Hoffnung, das Geschäft am Laufen zu halten. Das könne sich jetzt in der Krise rächen."

Number Of The Day " Goodwill On Top 133 Listed German Companies Balance Sheets...."

2009-07-05T22:13:00.000-07:00

I have written about this in the past ( see Thank God There is No Stress Test On Goodwill Assets Propping Up Bank Balance Sheets......... ) and i think this topic is indeed a ticking time bomb that will "wreck" numerous balance sheets. I´m pretty sure that this issue is similar around the globe and will pop up on a weekly basis.... Except there will be an accounting change not to mark these assets "mark-to market"..... Wouldn´t be the first time ....... :-)

Ich habe über diese Thematik bereits vorher ( siehe Thank God There is No Stress Test On Goodwill Assets Propping Up Bank Balance Sheets.........) geschrieben und ich bleibe dabei, das es sich hier um eine tickende Zeitbombe handelt die schon bald etliche Firmenbilanzen "ruinieren" wird. Da diese Problematik weltweit dieselbe ist dürften hier demnächst Meldungen im Wochenrhythmus Schlagzeilen machen.... Es sei denn es wird eine neue Bilanzierungsvorschrift aus dem Hut gezaubert die diese "Mark to Market" Bewertung aussetzt..... Wäre ja nicht das erste Mal........ :-)

Was waren das noch für Zeiten als es bis vor kurzem noch Vorschrift war die Übernahmen über mehrere Jahre konsequent abzuschreiben....... Da dies aber die kurzfristigen Gewinne belastet hat wurde nur allzu gern die erstbeste Möglichkeit ( Umstellung auf US GAAP/IFRS ) genutzt um diese "Belastung" zu vermeiden.... Wie sich jetzt zeigt hat dies die Bilanzen nicht gerade "wetterfester" gemacht und die Ergebnisse der letzten Jahre künstlich aufgebläht ( siehe aus dem Jahr 2004 WiWo Neuregelung der Goodwill-Abschreibung bewirkt Kurssprünge bei Dax-Werten )... .Argument war seinerzeit die bessere Vergleichbarkeit mit den internationalen Wettbewerbern...... Großes Kompliment an das Handelsblatt !

The 133 leading German listed companies have ( thanks to the M&A madenss during the past few years ) accumulated $ 265 Billion in Goodwill. This equals 44 percent of their capital.
In the worst case scenario this would half the equity ratio from 40 to just over 20 percent.
For all the details on the 133 companies involved in the study see Handelsblatt Goodwill Checklist May 2009

Firmenbilanzen bergen immense Risiken Handelsblatt

Die führenden deutschen Konzerne ( 133 analysierte Firmen aus Dax, MDax, TecDax und SDAX durch eine Untersuchung des Handelsblatts in Zusammenarbeit mit dem Institut für Wirtschaftsprüfung (IWP) in Saarbrücken und der Unternehmensberatung Oliver Wyman ) haben nach der Übernahmewelle der vergangenen Jahren 189 Milliarden Euro an Firmenwert in den Büchern. Das entspricht fast der Hälfte ihres Eigenkapitals. Wegen der Rezession drohen nun massive Abschreibungen. Bei einem Dutzend Unternehmen ist die Situation brenzlig.

In den Bilanzen der führenden deutschen Konzerne standen Ende des vergangenen Geschäftsjahres noch 189 Mrd. Euro an Goodwill. Dieser Betrag entspricht knapp 44 Prozent des bilanzierten Eigenkapitals.
Das verdeutlicht, welch gefährliche Zeitbombe in den Zahlenwerken tickt: Nach Abzug des Firmenwerts würde sich die aktuelle Eigenkapitalquote von gut 40 Prozent annähernd halbieren.

> Wer mehr zu den Einzelfällen ( z.B. Telekom ) wissen möchte sollte sich den Link sowie Firmen können nicht mehr wegschauen & Firmen nutzen Frühwarnsystem nicht ( beide Handelsblatt ) zu Gemüte führen und zudem einen Blick in die Handelsblatt Goodwill Checklist Mai 2009 ( enthält alle 133 Unternehmen aus DAX,MDAX, TECDAX & SDAX) werfen.

I´m pretty sure "Frankfurt, London & Wall Street Finest" have already "considered" the bullet proof balance sheets into their as usual conservative forecasts ( see Abby Joseph Cohen 2009 vs Abby Joseph Cohen 2001.....Which Call Is Worse? & The Wall Street Clown Show via Michael Panzner & CNBC´s Dennis Kneale: "The Great Recession Is Over")....... ;-)

Bin mir sicher das die Experten aus Frankfurt, London & New Yorks all dies in Ihren wie gewohnt "konservativen" Prognosen berücksichtigt haben (siehe Abby Joseph Cohen 2009 vs Abby Joseph Cohen 2001.....Which Call Is Worse? & The Wall Street Clown Show via Michael Panzner & CNBC´s Dennis Kneale: "The Great Recession Is Over")......... ;-)

China’s Loan Growth Isn’t Boosting My Confidence In China’s “Green Shoots” Michael Pettis

2009-07-01T12:13:00.000-07:00

I wrote in February ( see Number Of The Day "Credit Explosion In China" ) "This almost surreal number is signalling a real panic among the leaders..." & "I wonder what percentage of the loans will default".... There is nothing to add ( except the percentage will be sky high UPDATE: See link about the Beijing housing frenzy)........ ........ The level of panic might explain why protectionism is on the rise.....Good luck to all the investors/experts ( probably 90 percent.... ) that still think China will lead the rest of the world out of the dark....The first link from Michael Pettis is a must read! He provides the best insight on China......

Ich schrieb im Februar ( siehe Number Of The Day "Credit Explosion In China" ) "Diese unheimliche Zahl signalisiert ne echte Panik der chinesischen Führung...." & "Möchte nicht wissen welcher Prozentsatz dieser Ausleihungen in 24 Monaten als notleidend deklariert werden muß......" Nach aktueller Datenlage ist dem wenig hinzuzufügen.... Höchstens die Gewissheit das die Panik noch zugenommen hat und das eine gigantische Zahl dieser Kredite implodieren wird ( Update : Bitte den Link zum Immomarkt in Bepinkg lesen )...Wie groß die Panik zu sein scheint kann man auch am zunehmenden Protektionismus erkennen......Wer noch immer auf China als große Hoffnung der Weltkonjunktur setzen möchte dem wünsche ich viel Glück......Sieht fast so aus als wenn China demnächst einen nicht geringen Teil der $ Reserven für das eigene Bankensystem & die Provinzen benötigt...... Empfehle einmal mehr den Link von Michael Pettis. Habe bisher keinen gefunden der einen besseren Einblick in das chinesische "Innenleben" offenbart. Und das i.d.R Monate bevor andere darüber berichten......

China’s loan growth isn’t boosting my confidence in China’s “green shoots” Michael Pettis!

New loans	2008	2009
January	804	1,600
February	243	1,100
March	286	1,900
April	464	591
May	319	665
June	332	1,200
Half year	2,448	7,056
July	382
August	272
September	378
October	182
November	478
December	772
Total	4,912

China Bank Lending Funneled Into Stocks, News Says Bloomberg

Chinese new bank loans worth about an estimated 1.16 trillion yuan ($170 billion) were invested in the stock market in the first five months of this year, China Business News reported, citing a government economist.

That’s 20 percent of the 5.8 trillion yuan loans banks extended in the period, the Shanghai-based newspaper said.

> By the way the index has now bubbled higher to 3.050....... Update:Bawang International IPO, a Chinese herbal shampoo maker, was 446 times subscribed & Coal trader China Qinfa Group IPO 96 Times Oversubscribed

> Der Index steht aktuell bei 3.050....... Update :Bawang International IPO, a Chinese herbal shampoo maker, was 446 times subscribed & Kohlehändler China Qinfa Group IPO 98-fach überzeichnet

Chinese Banks: "An Accident Waiting to Happen" Naked Capitalism

Note the phrase "able to bear". Fitch's "macro-prudential risk" indicator for China threatens to jump from category 1 (safe) to category 3 (Iceland, et al).

This is a surprise to me but Michael Pettis from Beijing University says China's public debt may be as high as 50pc-70pc of GDP when "correctly counted".

The regime is so hellbent on meeting its growth target of 8pc that it has given banks an implicit guarantee for what Fitch calls a "massive lending spree".

Bank exposure to corporate debt has reached $4,200bn. It is rising at a 30pc rate, even as profits contract at a 35pc rate...

Roll-over risk is rocketing.

China's monetary stimulus since November is arguably more extreme than the post-Lehman printing of the US Federal Reserve, though less obvious to the untrained eye....

Beijing housing bubble growing, says state media Marketwatch

Beijing's property prices are climbing at an unsustainable rate, with residential property in the city center leaping 6.5% in the past week alone, according to a report Friday in the state-run China Daily newspaper.

The report, which cited data from property broker Homelink, said some neighborhoods have seen demand for apartments at four times the number of units available.

"We used to talk about monthly price growth, but recently, it's more about daily change," the report quoted a Homelink broker as saying.

"The bidders have gone irrational. A bubble in Beijing's property market is definitely there," the report quoted Soho founder and Chief Executive Pan Shiyi as saying.

The report said other large cities across China were seeing a similar phenomenon, with industry leaders now worried that the market is priming for a big drop at some point in the future.

> I´ve written earlier about the CRE in Beijing ( see Beijing's Olympic Building Boom Becomes A Bust )....

> Hier ein paar Fakten zum Zustand des gewerblichen Immobiliensektors in Peking ( siehe Beijing's Olympic Building Boom Becomes A Bust )

By Rodman's calculations, 500 million square feet of commercial real estate has been developed in Beijing since 2006, more than all the office space in Manhattan. And that doesn't include huge projects developed by the government.
He says 100 million square feet of office space is vacant -- a 14-year supply if it filled up at the same rate as in the best years, 2004 through '06, when about 7 million square feet a year was leased.

Herd Mentality On Steroids

2009-06-30T12:17:00.000-07:00

It seems I wasn´t far off..... Everybody is once more chasing the same strategy.......No wonder when computer trading ( must see clip Themis Trading: "Principal Program Trading Is A Way To Get The Market Go In Your Direction" )& models are the dominant force on the exchanges these days.....This leaves unfortunately little room for "common sense"..... I doubt that this will end as hilarious ( see "Depression-Era Bear Market Rallies" ) as in the following clip .....

Da lag ich dann wohl nicht nicht ganz verkehrt .... Sieht ganz so aus als wenn einmal mehr alle ein und dieselbe Strategie verfolgen..... Liegt sicher auch daran das heutzutage computergestützter Handel ( passend hierzu Themis Trading: "Principal Program Trading Is A Way To Get The Market Go In Your Direction" ) bzw. Strategien die Märkte dominieren..... Da kommt der "gesunde Menscheverstand" leider oft zu kurz......Bezweifle aber stark das dieser Anfall von "Herdentrieb" für die Akteure ähnlich ausgelassen ( siehe "Depression-Era Bear Market Rallies" ) wie im folgenden Clip enden wird ....

FT Alphaville

June 29 (Bloomberg) — Investors are moving in lockstep like never before, driving up stocks, commodities and emerging markets and risking a replay of last year, when they all plunged the most since World War II.

The Standard & Poor’s 500 Index, whose increase in the past three months was the steepest in seven decades, is rallying in tandem with benchmark measures for raw materials, developing- country equities and hedge funds. The so-called correlation coefficient that measures how closely markets rise and fall together has reached the highest levels ever, according to data compiled by Bloomberg . .
The correlation coefficient for the S&P 500 and the Reuters/Jeffries CRB index of commodities has been at 0.74 for the last 60 days.
A value of 1 means perfectly correlated, but to give you the historical significance of a reading of 0.74 — it’s the highest correlation in at least five decades, according to Bloomberg

The S&P is also increasingly (werrdly) moving in tandem with the price of crude oil, with the correlation value above 0.7 in June. The correlation between the S&P and the MSCI Emerging markets index is also apparently the tightest since Russia defaulted on its debt in 1998

The rather dramatic increase in correlation should be a bit of a worry for investors, since it makes diversification rather difficult.

> Here another stunning chart.....

> Hier ein weiterer Chart der zeigt das momentan eine Art "Ausnahmezustand" herrscht.......

UK CRE Now Off 45 Percent From The Peak.......

2009-06-29T20:35:00.000-07:00

Could be worse if you are a foreign investor..... The British Pound is 20 percent off against all other major currencies over the past 12-18 months.....

Wenn man jetzt noch bedenkt das das britische Pfund gegenüber allen relevanten Währungen auf Jahressicht über 20% verloren hat sieht die Lage für ausländische Investoren noch düsterer aus...... Der Sektor der gewerblichen Immobilien dürfte schon sehr bald die Schlagzeilen mit spektakulären Pleiten dominieren..... Mich wundert das die in Deutschland dominierenden offenen Immobilienfonds ( etliche mit signifikanten UK Exposure siehe Chart Geographische Verteilung der Objekte In Offenen Immobilienfonds via FAZ/Scope ) trotz einer regelrechten Implosion im gesamten Sektor ( plus der teilweise drastische Währungseffekt in UK & Osteuropa ) querbeet über alle Regionen es noch immer schaffen keine Verluste auszuweisen...... Denke das spätestens wenn die Mieterneuerungen anstehen die ein oder andere Überraschung "droht".....

“Losses on UK commercial real estate could equal subprime” FT Alphaville BNP Paribas analysts are worried about the health of the UK’s commercial real estate sector. In a note released on Friday, they warned that a “combination of rising vacancy rates, falling rentals and extraordinarily difficult financing conditions will almost certainly drive UK CRE losses higher.”

Analysts Vivek Tawadey and Olivia Frieser contend that CRE is the “next leg of the credit story” in both the US and the UK, which they believe could see a major CMBS default.

From the note (any emphasis FT Alphaville’s):

Bonds backing CRE assets of a UK property investor (Simon Halabi) are likely to default on £1.15bn of debt. In this particular case, the values of the nine “prime” London office buildings (included the offices of JPM, the UK headquarters of Aviva, the Naval and Military Club amongst others) that were securitised have fallen from £1.8bn in November 2006 to £929mn as of 8 June, a reduction of almost 50%.

According to IFD, UK commercial properties values have been declining fast with peak to current declines of around 45%, with major declines noted in all major segments - retail, offices and industrials

At the same time the amount of available floor space for occupation increased at the fastest pace since 1999 in all regions with the exception of London (Chart 2) and thevalues of inducements rose at its fastest pace since the survey’s history in 1999. Collectively this implies that an upward correction in prices in the foreseeable future is unlikely.

> I would love to see a similar stat for Dubai ( see The Upcoming Skyscraper Tsunami..... )

> Ich würde liebend gerne eine ähnliche Statistik für den Markt in Dubai sehen ( siehe The Upcoming Skyscraper Tsunami..... )

Tawadey and Frieser also point to the refinancing risk ahead:

Around £43bn (or 19%) of all CRE loans comes due for repayment in 2009. A further 14% matures per year annually in 2010 and 2011 (Chart 3) or in excess of £100bn over the next 3 years, implying very significant refinancing risk inevitably leading to higher defaults.

The fact that only 10% of CRE loans are securitised in Europe (US: 30%), also underscores that more of these loans are held on bank books, leading to potential write-downs down the line.

S&P On US CMBS / CRE FT Alphaville

The agency wants CMBS credit enhancement levels sufficient for AAA-rated tranches to be able to withstand some pretty severe declines (40 to 50 per cent) in the value of commercial property.

> So it looks like 50 percent off is the new normal...... And watching the next graph ( HT Zero Hedge ! ) i´m not sure if this will be enough..... Needless to say that the Fed just a few weeks ago has proposed a CRE TALF program to buy tons of this crap ( No Kidding..... S&P Is Acting Responsible & Threatens To Blow Up Fed´s CRE Bailout Stunt Via TALF ). It will be fun to watch how they will go along with the collateral criteria..... They already have loosened it once ( see ( see Fed Bends Over Backward For CMSA, Will Feed Inflation Capacitor With More Toxic Garbage via Zero Hedge ). .....

> Sieht ganz so aus als wenn eine coole Halbierung vom Top in den ehemals heißgelaufenen Märkten eher die Regel als die Ausnahme ist....... Bin mir sicher das Banken in Ihrer bekanntermaßen vorausschauenden Weitsicht hierfür ausreichend "Vorsorge" getroffen haben..... Wenn man sich jetzt die nächste Grafik ( Dank an Zero Hedge ) ansieht dürfte klar werden was sich für ein Debakel zusammenbraut....... Möchte nur noch mal zur Belustigung darauf hinweisen das die Fed vor wenigen Wochen extra ein TALF Programm gestartet hat um für wahrscheinlich bis zu 100 Mrd $ den Giftmüll zu kaufen ( siehe No Kidding..... S&P Is Acting Responsible & Threatens To Blow Up Fed´s CRE Bailout Stunt Via TALF ) ...... Bin gespannt wie weit die Fed noch sinken kann....Bisher hat Sie bereits einmal die Bedingungen für die Sicherheiten gelockert ( siehe ( see Fed Bends Over Backward For CMSA, Will Feed Inflation Capacitor With More Toxic Garbage via Zero Hedge ).......

UPDATE :

Graph
European Top 20 From JPM’s CRE Risk List

( Note: Data from end of 2008! )

Dubai Update.....The Upcoming Skyscraper Tsunami.....

2009-06-29T00:25:00.000-07:00

Flashback / Rückblende Feb 2009

In February, Dubai announced a $10 billion bond offering. It was fully subscribed by the central bank of the United Arab Emirates, making it essentially a federal bailout. The Dubai government has used the money to help government-related entities pay off debt.

Dubai is calling the deal between of Emaar with a 100 percent state controlled company a merger.....Good joke...They won´t laugh in Abu Dhabi / UAE for sure.....I´m not sure how long Abu Dhabi ( see also No Kidding.... Dubai May Need Help To Repay Debt...., Dubai's bail-out, Dubai Gets $10 Billion Bailout to Ease Debt , Big spending Dubai may have to be bailed out by Abu Dhabi ) will be "glad" to bail Dubai out..... I assume the next time $ 10 Billion won´t be enough.......

Dubai nennt den Deal zwischen Emaar ( bauen u.a. den modernen Turm zu Babel.... ) und einer anderen Firma die zu 100% im Staatsbesitz zwar eine Fusion. Guter Witz.....In Abu Dhabi / UAE wird man darüber aber wohl kaum lachen ...... Schön zu sehen das der Größenwahn, der nirgends so ausgeprägt gewesen ist wie in Dubai, früher oder später zum scheitern verurteilt ist. Bin gespannt wie lange Abu Dhabi / UAE ( siehe No Kidding.... Dubai May Need Help To Repay Debt.... , Dubai's bail-out, Dubai Gets $10 Billion Bailout to Ease Debt , Big spending Dubai may have to be bailed out by Abu Dhabi ) noch willens ist Dubai mehr oder weniger vor dem Kollaps zu bewahren.... In jedem Fall werden 10 Mrd $ beim nächsten Mal wohl nicht reichen....... UPDATE: ein aktueller Lagebricht von Guido Mingels / Die Zeit Goodbye, Dubai Tip Top!

Dubai Index Drops Most Since November on Emaar’s Merger Plans
June 28 (Bloomberg) -- Emaar Properties PJSC pushed Dubai’s index to its biggest decline in more than seven months on concern shares of the Middle East’s biggest property developer may be suspended or diluted pending a potential merger.

Dubai-based Emaar dropped 10 percent, the maximum daily limit allowed, after the company said it’s in talks to merge with state-controlled Dubai Properties LLC, Sama Dubai LLC and Tatweer LLC, all units of Dubai Holding LLC.

The new entity will have 13.4 billion dirhams ($3.65 billion) in debt obligations, representing 7 percent of total assets, Emaar said today.

“Investors are worried a merger may mean a long share halt as is the case with Amlak and Tamweel,” said Mohamed Dwaikat, a broker at Al Fajer Securities in Abu Dhabi. “There is also concern about a possible dilution of the shares.” Amlak Finance PJSC and Tamweel PJSC, the United Arab Emirates biggest mortgage firms, haven’t traded since November pending a planned merger.

The Dubai Financial Market General Index lost 6.1 percent, the biggest fall since November, to 1,745.07, trimming the gain for this quarter to 11 percent. Abu Dhabi’s ADX General Index retreated 2 percent, paring this year’s advance to 7.7 percent.

Emaar, which is building the world’s tallest tower and makes up about 20 percent of Dubai’s index,fell to 2.89 dirhams.

Al Mal Capital PSC suspended its recommendation on the company, saying the planned merger could be “potentially dilutive” for Emaar shareholders.

Dubai Holding is a 100 percent state-controlled entity, while the government of Dubai owns about a 31 percent stake in Emaar, Bloomberg data show.

> At least Dubai´s sovereign debt rating is better than Iceland´s............

> Dubai schafft es immerhin Island in Scahen Kreditwürdigkeit zu schlagen.......

> Judging the following project ( see Dubai plans 'moving' skyscraper BBC) i think the term megalomaniac isn´t far-fetched....... I´m pretty sure there is ZERO chance that this "vision" will be build. The following clip is from mid 2008 and clearly a sign how far this bubble has been pumped up....

> Bei Betrachtung der nächsten "Vision" ( siehe Dubai plans 'moving' skyscraper BBC ) ist der Begriff "Größenwahn" sicher nicht zu hoch gegriffen....... Gehe jede Wette ein das dieses Objekt niemals gebaut werden wird. Der nachfolgende Clip ist von Mitte 2008 und zeigt eindrucksvoll welche Aussmaße die Blase zwischenzeitlich angenommen hat.

> Thank god there isn´t a lot of new space coming online .......;-) Now combine the upcoming glut with the sky high price level ( HT Paul Kedrosky )...... DOH! As far as i can see i think not an insignificant amount of the regions SWF will be needed to prop up the banking sector......

> Gottseidank kommt in nächster Zeit ja kaum neues "Material" auf den Markt......;-) Die beste "Medizin" um das bereits jetzt astronomisch hohe Preisniveau ( Dank an Paul Kedrosky ) zu halten..... Denke das ein nicht unwesentlicher Teil der Sovereign Wealth Funds in der Region demnächst benötigt werden um das heimische Bankensystem zu stützen.......

Future Dubai skyscrapers Wikipedia
Under construction Burj Dubai · Pentominium · Burj Al Alam · DAMAC Heights · Princess Tower · Marina 101 · 23 Marina · Emirates Park Towers Hotel & Spa · Elite Residence · Lam Tara Towers · D1 · The Marina Torch · Infinity Tower · Al Yaquob Tower · The Index · HHHR Tower · Ocean Heights · Ahmed Abdul Rahim Al Attar Tower · Central Park Towers · I&M Tower · Dubai Pearl · Sulafa Tower · G-Tower · Mag 218 Tower · Acico Twin Towers · Marina Pinnacle · Khalid Al Attar Tower 2 · Vision Tower · Ubora Commercial Tower · Conrad Dubai · Metro Tower · Al Tayer Tower · Churchill Towers · Sama Tower · The Buildings by Daman · Rolex Tower · Anantara Towers · Tiara United Towers · Al Bateen Tower · Trident Grand Residence · Latifa Tower · Executive Towers · Grosvenor House The Residence · Concorde Tower · Platinum Tower · Dubai Jewel Tower · Jumeirah Bay · Sidra Tower · Dubai Tower · Tiffany Towers · Silver Star · The Bay Gate · Dubai Islamic Bank Tower · Jumeirah Al Khor Residence · Pier 8 · Iris Bay · Liberty House · Goldcrest Executive · Dubai Gate 1 · The Prism · AG Tower · AU Tower · Lake Point Tower · Swiss Tower · Goldcrest Views 2 · The Residences · Silverene · Dubai Arch Tower · Laguna Tower · Verde Residences and Offices

Approved Dubai Towers Dubai · Lighthouse Tower · Al Sharq Tower · The Skyscraper · Al Hekma Tower · Providence Tower · The Palm Trump International Hotel & Tower · Abjar Tower · Nili Tower · ARY Digital Tower · Boraq Tower · The Sheffield Tower · Fortune Araames · Duja Tower · El Matador Tower · Arabian Crowne · Mag 220 Tower · The Dome · Jumeirah Business Center 1 · The Prime Tower · The Forum

Proposed Dubai City Tower · Nakheel Tower · Anara Tower · 1 Park Avenue · Meraas Tower · Marina Sky Towers · Marina 106 · Dynamic Tower · P-17 · The Wave Tower · Signature Towers · His Highness Sheikh Hasher Tower · Beachfront Tower Hotel · Beach Towers · Time Residences · Al Ghaith Tower

> I doubt that even one proposed or approved object will be realized.... Wouldn´t surprise me if we see will something similar what happened in Bangkok ......

> Von den genehmigten bzw. angedachten Projekten wird sicher kaum eines je verwirklicht werden..... Denke es grenzt bereits an ein Wunder wenn die bereits im Bau befindlichen Objekte fertiggesetllt werden.....Könnte leicht passieren das sich ähnliches wie in Bangkok wiederholt......

Chart Of The Day "Depression-Era Bear Market Rallies"

2009-06-28T20:54:00.000-07:00

You can read my take on the current rally here.....

Meine Einschätzung zur aktuellen Marktlage kann man hier nachlesen.....

via Chart Of The Day
Many investors continue to look to the early 1930s for some insight into the current economic/stock market environment. While there are significant differences (global economy, credit default swaps, TARP, FDIC, etc.) between the current environment and that what occurred in the early 1930s, there are also many similarities (bank failures, bankruptcies, severe market declines, etc.). For some perspective on the current stock market rally that began on March 9th, today's chart illustrates duration (calendar days) and magnitude (percent gain) of all significant Dow rallies that occurred during the 1929-1932 bear market (solid blue dots).

For example, the bear market rally that began in November 1929 lasted 155 calendar days and resulted in a gain of 48%. As today's chart illustrates, the current Dow rally (hollow blue dot labeled you are here) is above average in both duration and magnitude relative to the average 1929-1932 bear market rally (hollow red dot).

Compared to the current rally, only one 1929-1932 bear market rally was greater in both magnitude and duration and that was the first 1929-1932 bear market rally that began in November 1929.

> Make sure you also read A Tale of Two Depressions & Mega-Bear Quartet for another excellent comparison......

> Für einen weiteren erstklassigen Vergleich der aktuellen Lage mit der um 1930 herum bitte unbedingt A Tale of Two Depressions & Mega-Bear Quartet die Aufmerksamkeit schenken.

"China Inc." Deal Premiums.......

2009-06-25T22:34:00.000-07:00

Another way to recyle the greenback.... The race to hard assets is speeding up.....Unfortunately China´s deal ethics are more than often non existent & inhuman ( see Oil for China, Guns for Darfur / China and Sudan Fact Sheet ) UPDATE: Says China should buy gold, natural resources, U.S. land

Auch ein Weg wie man die ungeliebten und im Überfluß vorhandenen US $ Bestände wiederverwerten kann..... Die Flucht in Hard Assets wird weltweit sicher noch zunehmen.... Wenig überraschend ist China auf dem Weg zum Ziel im Zweifel jedes Mittel recht ( siehe Oil for China, Guns for Darfur / China and Sudan Fact Sheet ).....UPDATE: Says China should buy gold, natural resources, U.S. land

Is China Inc. Overpaying in Its Merger Deals? WSJ Deal Journal
Deal makers know that to succeed you have to make your assets speak louder than your liabilities. China Inc. is learning that lesson.

Just look at Sinopec’s bid to acquire Swiss oil company Addax, which has a big presence in Africa. The price that China Petrochemical Corp., the Chinese state-owned oil company known as Sinopec, is offering is much higher than usual for the sector, analysts say.

Sinopec’s offer is equivalent to $34 a barrel of proved reserves and $14 a barrel of proved and probable reserves. The African transaction average in 2007, when the average crude price is similar to current prices, was $14.40 a barrel for proved reserves and $9.90 for proved and probable reserves, respectively. On a proved basis, the 2007 average suggests $3.1 billion total value for the deal. Therefore, $7.2 billion implies a 135% premium.

The deal also shows China’s willingness to take risks, as Sinopec would gain a presence in oil-rich but politically sensitive Iraqi Kurdistan as well as offshore West Africa, one of the hottest sectors of the oil world but one that includes Nigeria, where local militants continually harass drillers.

Already this year, Chinese companies have notched 10 deals in the oil & gas space. The total number of oil & gas deals in all of last year was 14

This Sinopec deal, if completed, would be the largest overseas takeover in China’s M&A history in natural resources The deal also would boost the value of Chinese oil & gas mergers and acquisition to $12 billion, up 80% from the same period last year.

> Add this number to the mix ( via WSJ )

> Um das Bild abzurunden sollte man die nachfolgende Summe ebenfalls miteinbeziehen.....

Over the past half-year, China has proffered more than $45 billion in loans to Russia, Brazil, Venezuela and Kazakhstan in exchange for long-term crude supplies.

> Very unlikely that this trend will reverse course......

> Wenn man jetzt noch die Reaktion der kommenden "Elite" mit berücksichtigt halte ich es für extrem unwahrscheinlich das sich dieser Trend demnächst ändert...... :-)

Dennis Gartman

As we reported here, Geithner’s attempts to reassure Beijing authorities that the US government was still upholding a strong US dollar policy were met with loud laughter by an audience of students at Peking university.

Got GOLD....?

ECB: Record 442 billion Euros “Stimulus by Stealth”

2009-06-24T21:46:00.000-07:00

HT to Alea for the excellent headline. After reading the latest ECB "Instability" Report....... & the almost irresistable conditions ( despite news like this ECB Tightens Rules On Liquidity Facilities & Adjustment of risk control measures for newly issued asset-backed securities and for uncovered bank bonds ) it is no surprise to see such a huge number. .......A no brainer...... I can imagine Trichet is already praying that this will work.....I have some serious doubts......Liquidity is & was not the issue..... Core problems ( impaired bank balance sheets, not enough creditworthy borrowers ) are still unsolved and are getting worse on a daily basis..... Update : Spanish banks to get €90 billion bailout

Dank an Alea für die sehr treffende Überschrift. Nachdem ich den letzten ECB "Instability" Report....... gelesen habe und wenn man die unwiderstehlichen Konditionen ( trotz leicht verschärfter Bedingungen / siehe ECB Tightens Rules On Liquidity Facilities & Adjustment of risk control measures for newly issued asset-backed securities and for uncovered bank bonds ) berücksichtigt dürfte die Höhe nicht wirklich überraschen. Eine echte Lizenz zum Gelddrucken.....Kann mir bildlich vorstellen wie Trichet & Co beten, das dieser Kraftakt endlich dazu führt, das die Kreditmärkte wieder wie gewünscht funktionieren ( Update Banken tragen Milliarden zurück zur EZB ).... Ich denke das auch dieser Versuch maximal etwas Linderung in Form von geringeren Spreads verschaffen wird..... Dummerweise ist mangelnde Liquidität nicht das Problem. Solange die Problematik der bilanztechnisch insolventen Banken nicht gelöst wird und man anerkennt das es im Angesicht einer lang anhaltenden Rezession einfach zu wenig kreditwürdige Unternehmen gibt, dürfte sich die Lage weiter verschlechtern. Wenn man so will handeln die Banken aus Ihrer Sicht ironischerweise momentan das erste Mal nach Jahren der "Trunkenheit" richtig. Tragisch aus deutscher Sicht ist vor allem das unser Bankensystem trotz fehlender eigener Blase dank der desaströsen Exzesse besonders der Landesbanken ( folgerichtig kommen die Sparkassen als Anteilseigner dank massivster Wertberichtigungen auf Ihre LB Anteile in ernste Schieflagen, was das besonders für den Mittelstand bedeutet kann man leicht erahnen..... ) eher einen bzw. den Spitzenplatz der Problemliste belegt..... Updadte: EZB pumpt Rekordbetrag in den Markt FTD & Spanish banks to get €90 billion bailout

ECB pumps €442bn into banking system FT
The European Central Bank on Wednesday pumped hundreds of billions of euros in one-year loans into the eurozone’s weakened banking system, making record amounts of emergency finance available in a bid to unlock credit markets and revive the region’s economies.

In a dramatic step dubbed “stimulus by stealth” in financial markets, the ECB lent €442.2bn for 12 months to more than 1,100 banks at its current benchmark interest rate of 1 per cent.

The high demand for the funds, in what was the ECB’s first ever auction for one-year loans, reflected a growing realisation by the banks that emergency funding may not be available again on such favour-able terms.

The central bank’s action could boost the eurozone’s recovery prospects by lowering market interest rates and creating more scope for banks to lend to the private sector.

The ECB action, which attracted 1,121 bidders – more than usual in ECB operations – had an immediate impact in driving down overnight and longer-term market interest rates, though the full effects are still to feed through.

Don Smith, economist at inter-dealer broker Icap, said: “The massive scale and undoubted success of this tender almost entirely reflects the cheapness of the funds on offer.”

The previous largest amount injected in a single ECB operation was €348.6bn in December 2007.

The economic impact will depend on whether demand for liquidity in future ECB market operations is reduced as a result of Wednesday’s action, as well as whether banks step up lending.
“They must pass it along,” Lorenzo Bini Smaghi, an ECB executive board member, said in Rome.

> "...must pass it along" This kind of rhetoric will only be working in China ( see Number Of The Day "Credit Explosion In China" & todays must see Borrowed in China from FT Alphaville ). Probably ( after FT Alphavilles update DEFINITELY ) the NPL from the not so distant future...... Smaghi probably one of the ECB members pressing for "quantitive easing" ( despite intense discussions among the ECB members so far almost non existent ).......

> "...must pass it along" Wird wohl ein Wunschgedanke bleiben..... In China sieht das momentan ganz anders aus ( siehe Number Of The Day "Credit Explosion In China" sowie die aktuellen Daten für Juni Borrowed in China WAHNSINN!). Da wird solchen Wünschen wenn Sie von der richtigen Stelle geäußert werden "bedingungslos" Folge geleistet. Die Chancen das es sich um die faulen Kredite von morgen handelt sind nicht zu unterschätzen ( nach dem Update von FT Alphaville eine "leichte" Untertreibung )...... Unschwer zu erkennen das Smaghi eher dem Camp innerhalb der EZB angehört die PRO "Quantitive Easing" ( bisher trotz intensiver Diskussionen praktisch kaum vorhanden ) sind......

WSJ

By promising a full allocation of all bids on Wednesday, the ECB has effectively passed responsibility for any easing of policy to the banks themselves, giving license to any institution that thinks it can lend the money profitably into the real economy.

AJ via Alea

“If I were a bank I would be gathering up all the furniture to use as collateral to take part.” said Erik Nielsen, European economist at Goldman Sachs.

AMEN!

Contrary Indicator.... The Retail Investor Is Back.....

2009-06-18T21:56:00.000-07:00

Looks like the "herd mentality" ( with the help from usual vicarious agents / see Abby Joseph Cohen 2009 vs Abby Joseph Cohen 2001.....Which Call Is Worse? & The Wall Street Clown Show via Michael Panzner UPDATE: CNBC´s Dennis Kneale: "The Great Recession Is Over") has once again sucked the small investor into this very dangerous market.... Just in time after a 40 percent ( S&P from 666 to over 900, DAX from 3600 to north of 5.000, Nikkei from 7.000 to over 10K, etc..... ) runup & insiders dumping shares ( see Insiders Exit Shares at the Fastest Pace in Two Years including a very interesting chart ) .... The clip is excellent !

Es sieht einmal mehr danach als wenn der "Herdentrieb" ( auch dank der wunderbaren "Expertenunterstützung" / siehe Abby Joseph Cohen 2009 vs Abby Joseph Cohen 2001.....Which Call Is Worse? & The Wall Street Clown Show via Michael Panzner UPDATE: CNBC´s Dennis Kneale: "The Great Recession Is Over" PURE COMEDY!) einmal mehr ganze Arbeit geleistet hat und den Privatanleger im großen Stil zurück in den "verminten" Markt gelockt hat...... Nach Anstiegen von ca. 40% ( S&P von 666 auf über 900, Dax von 3600 auf fast 5200, Nikkei von 7000 auf über 10K, usw. ) und massivsten Insiderverkäufen ( siehe Insiders Exit Shares at the Fastest Pace in Two Years beinhaltet u.a. einen sehr sehenswerten Chart ) gerade noch rechtzeitig..... Klasse Clip!

Hat tip to Zero Hedge

Neesdless to say that i think Biderman is spot on & that herding is a global "phenomenon" ( see A year in perspective, Shanghai edition via FT Alphaville )......

Überflüssig zu erwähnen das ich hundertprozentig mit Biderman übereinstimme und das der Börsenwahn weltweit erneut um sich gegriffen hat ( siehe A year in perspective, Shanghai edition via FT Alphaville ) ...... UPDATE: Hier ein weiterer erstklassiger Kontraindikator.... Der ZEW Index ( Das ZEW befragt jeden Monat Analysten und institutionelle Anleger zu ihren Erwartungen an die konjunkturelle Entwicklung ) sieht charttechnisch so aus ( sicher kein Zufall das der fast identisch mit dem DAXverlauf ist..... ). Textlich geht das dann ähnlich dem Artikel im MM ( siehe ZEW-Index signalisiert Ende der Talfahrt ) über den Ticker.....

Protectionism On The Rise....."China Edition"

2009-06-17T03:15:00.000-07:00

First the US and now China ( the country with the biggest surplusses ) ...... Just what the doctor ordered...... Now combine this with the following chart ( for more more "depressing" charts see A Tale of Two Depressions & World Trade Shrinks ) and we all can only hope that this kind of "cancer" isn´t spreading.... But i have some serious doubts.....

Nachdem die USA ja bereits trotz einmal mehr großer Worte von Obama die "Buy American" Klausel in Ihrem Konjunkturpaket haben festschreiben lassen kommt jetzt der nächste Tiefschlag...... Wenn die Weltkonjunktur eines nicht gebrauchen kann dann ist es eine Ausuferung des Protektionismus. Der Welthandel ist eh im freien Fall ( siehe klasse Chart via WSJ World Trade Shrinks )..... Das jetzt ausgerechnet China ( das Land mit den größten Handelsüberschüssen ) genau in diese Richtung marschiert ist mehr als bedenklich und läßt einem bei dem nachfolgenden Chart ( mehr depressive Charts via A Tale of Two Depressions ) noch pessimistischer in die Zukunft blicken.......

‘Buy China’ policy set to raise tensions FT

China has introduced an explicit “Buy Chinese” policy as part of its economic stimulus programme in a move that will amplify tensions with trade partners and increase the likelihood of protectionism around the world.
In an edict released jointly by nine government departments, Beijing said government procurement must use only Chinese products or services unless they were not available within the country or could not be bought on reasonable commercial or legal terms.

The government also said it was launching an investigation in response to complaints from domestic industry associations which accuse local governments of favouring foreign suppliers in procurement related to the country’s Rmb4,000bn ($585bn, €421bn, £356bn) economic stimulus package.

Just a few months ago Beijing was raging against a proposed “Buy American” clause included in the US economic rescue package.

“Some countries raised clauses to prioritise the purchase of products of their own countries in their economic stimulus packages,” Yao Jian, a Chinese commerce ministry spokesman, told reporters in February. “We express deep concern about these [measures] ... under the current financial crisis, measures issued by all countries should not cause negative impacts, and especially they should not send out wrong messages.”

Most economists agree China’s economy is starting to recover as a result of its aggressive stimulus package but the country is still struggling with unemployment and fears widespread layoffs could lead to serious social unrest.

The edict was issued jointly by the legislative office of the State Council,China’s cabinet, the national development and reform commission (the country’s powerful state planning agency) and the ministries of industry and information, supervision, housing, transport, railways, water resources and commerce.

The new edict bans local governments and departments from discriminating against domestic suppliers in their procurement. Foreign companies operating in China argue that the opposite is in fact true and that they have been largely cut out of procurement related to the government’s stimulus package.

> More evidence via Michael Pettis that the potential for trade conflicts are rising......

> Hier ein anderes Beispiel das verdeutlich das sich Risiko von Handelskonflikten sich merklich erhöht hat.....

Trade tensions are not improving. Last week I had dinner with a very senior China manager at a large German company and he told me expected anti-dumping suits to surge in the first quarter of next year. As if to beat him to the punch yesterday’s Financial Times came up with this story (“China accused of predatory pricing practices”)

“We are puzzled by this discussion, especially since most European companies operating in China are locally incorporated and have not benefited directly from the government’s stimulus package,” said Joerg Wuttke, president of the European Union Chamber of Commerce in China.

“Requiring government procurement to favour Chinese goods and services certainly won’t help to address China’s trade surplus of €170bn.”

UPDATE: Ambrose Evans-Pritchard

China risks trade suicide Beijing is playing with fire by issuing a `Buy China' edict for its stimulus package.
Beijing risks making the same catastrophic error as the US Congress when it passed the US Smoot-Hawley Tariff Act in 1930. America was then the rising surplus power, like China today. It was the chief beneficiary of an open global system.

By imposing tariffs, Washington triggered massive retaliation. While nobody escaped the Great Depression that ensued, the effects were unequal. The US suffered a far steeper decline in output than the rest of the world. Britain muddled through relatively well in a trade bloc behind Imperial Preference.

China’s action is extremely disturbing. It confirms what we have long feared, that the Chinese government is sufficiently worried about rising unemployment to adopt suicidal measures. Nor does this episode instill confidence in the `China recovery story’.

China kennt die Kraft der Illusion FTD

Das Land will nur noch chinesisch kaufen, frisiert volkswirtschaftliche Statistiken und hängt weiter vom Ausland ab. Ganz schön merikanisch geworden

Die bisher größte Verwunderung löste Peking mit dem für das vierte und das erste Quartal gemeldeten BIP-Wachstum aus - 6,8 und 6,1 Prozent im Jahresvergleich sollen es gewesen sein. Das erstaunt, wo doch die Stromproduktion seit dem vierten Quartal zwischen einem und zehn Prozent im Vergleich zum Vorjahr rückläufig war. In China entfallen 80 Prozent des Stromverbrauchs auf die Industrie.

ECB "Instability" Report.......

2009-06-15T22:10:00.000-07:00

Not much stability to be found in the ECB Financial Stability Review ( Warning : Over 200 Pages ) ......

Ich konnte wenig Stabilität im 226 Seiten langen EZB Stabilitätsüberblick finden.....

Banks in the 16-nation eurozone face $283bn of further losses this year and next as the recession forces them to write off bad loans, the European Central Bank warned yesterday

> Wishful thinking.....

> Denke das die EZB wie im Regelfall der Musik mal wieder gnadenlos hinterger läuft.... Die Summe würde jeder wohl nur allzu gern für bare Münze nehmen.... Na ja , die EZB erwartet ja auch bereits für 2010 wieder Wachstum.....

The warning, which helped push down the euro against the dollar, came just hours before Moody's, the credit rating agency, downgraded 30 Spanish banks and cajas (unlisted regional savings institutions / see Moody’s bank downgrades, pain in Spain edition & Spanish Banks CDS Ouch!!! via Alea), citing the worsening quality of their loans ( see Chart Of The Day - " 90 Day Delinquency Rates In Spanish RMBS" ) and the struggling Spanish economy.

FT Alphaville

MADRID, June 16 (Reuters) - The number of houses sold in Spain fell by 47.6 percent in April compared to a year earlier, marking the largest percentage fall in 16-straight months of decline, the National Statistics Institute said on Tuesday.

The fates of the eurozone economy and its banks have become increasingly interlinked, the ECB said yesterday in its latest financial stability review report, with bank losses increasingly being caused by bad loans, rather than losses on securities.

Risks to the stability of the financial sector remained high, it said, while "uncertainty prevails" over the banking system's ability to absorb further shocks.

> The exposure to Eastern Europe isn´t "helpful"

> Die extrem starke Stellung in Osteuropa wird die nächsten Jahre ebenfalls wenig hilfreich sein.

Banks' exposure to eastern Europe The Economist

Lucas Papademos, ECB vice-president, said that "a negative interplay" between the financial sector and the economy had become clearer since the start of this year. He stopped short of calling for more transparent stress testing. The ECB, which acts as the monetary authority for the countries that share the euro, is not a bank supervisor.

In spite of the scale of the bank losses forecast by the ECB, its prediction was less gloomy than the International Monetary Fund, which in April put expected writedowns this year and next at $750bn, although taking account of loss provisions and write-offs up until May this year would reduce that to about $540bn.

> I´ll go with the IMF...... Especially in the face of news like this Record Job Losses in Europe via Financial Ninja.... I think it is a safe bet that record job losses will be popping up a a regular basis for years to come....

> Ich bin da eher der Meinung des IMF...... Besonders da wir diese Meldung ( Record Job Losses in Europe via Financial Ninjy ) die nächsten Jahre wohl noch öfter zu hören bekommen werden......

The gap between the ECB and IMF forecasts is due to different assumptions, for instance on the performance of loans.

The ECB also expressed confidence that the eurozone's largest banks could endure any further economic deterioration, saying "most . . appear to be sufficiently well capitalised to withstand severe but plausible downside scenarios".

> Needless to say that i beg to differ...... Taxpayer to the rescue....... This is especially true for the German Landesbanken ( seeGermany's Subprime Crisis: Interview With Achim Dubel & A darkened outlook for Germany’s banks ) The "funny" part is that they were once created to support local economies and are owned by regional governments and savings banks aka the taxpayer.......

> Brauche wohl nicht zu erwähnen das ich diese Meinung nicht teile..... Denke das der Steuerzahler schon bald wieder im großen Stil erneut die Zeche zu zahlen hat ( Bad Banks..... ) Da machen solche Geschichten ( Abstruse Investments der Landesbanken ) gleich doppelt so viel Spaß ....... Passender als Extra 3 ( siehe "Werbespot" der HSH Nordbank ) kann man das Debakel aus deutscher Sicht kaum zusammenfassen ( AusnahmeGermany's Subprime Crisis: Interview With Achim Dubel ) ..... :-)

Herd Mentality / Herdentrieb

2009-06-12T03:42:00.000-07:00

What this has to do with Wall Street......? More than you think.....

Was das alles mit den Märkten zu tun hat....? Mehr als man denkt......

Hat tip Paul Kedrosky

Have a nice weekend... Looks like concerts from Santigold are fun to attend.... Just in case here is the list with their tour dates..... I´m not sure i can resist to watch them in Hamburg.... But i´ll have to check out if this guy is also on board... :-)

Allen ein schöne Wochenende....Sieht ganz so aus als wenn Konzerte von Santigold Spaß machen können..... Bin mir nicht sicher ob ich der Versuchung widerstehen kann die in Hamburg zu sehen..... Natürlich nur wenn der Typ erneut den Einpeitscher macht...... :-)

The Only Company That Has Managed To Get An Upgrade From Junk To Investmentgrade Is........

2009-06-10T22:08:00.000-07:00

Congratulations to Jeff Bezos....... The overall trend that the bondholders ( vs shareholders ) are the new masters will continue for quite a long time & news like this will pop up on a daily basis and "DILUTION" will finally have an effect on stock prices..... Questions from Wall Street Finest about the debt profile, maturities & the balance sheet quality in general were unheard of until 2008..... Up to early 2008 they still have asked how big the next buyback will be ( of course financed with newly issued debt , see "I Want My Buyback Back....")...........

Glückwunsch an Jeff Bezos....... Insgesamt bleibt festzuhalten das der Trend das die Anleihe und Kreditgeber den Kurs der Unternehmen bestimmen ( im Gegensatz wie in den letzten Jahren die Aktionäre ) noch auf Jahre hinaus intakt bleiben wird. Nachrichten wie diese werden zum Alltag gehören und irgendwann wird auch die "Verwässerung" einen Einfluß auf die momentan doch recht losgelösten Aktienkurse haben.......Und ich glaube kaum das Trends wie dieser ( siehe Europäer stürzen sich auf Ramschanleihen & Hochzinsanleihen: Zahlungsausfälle in Europa halten sich in Grenzen ) von Dauer sein werden...... Fragen in Unternehmenspräsentationen von Analystenseite zur Bilanzqualität ( Verschuldung, Fälligkeiten usw. ) habe ich persönlich bis zum Mitte 2008 nicht vernommen..... Bis dahin wurde stattdessen in schöner Regelmäßigkiet nach der Höhe des nächsten schuldenfinanzierten Aktienrückkaufes gefragt ( siehe "I Want My Buyback Back...." & Druckreifer Vergütungsirrsinn ) ........

Amazon.com: An Angel Among Us Deal Journal WSJ

Forty companies have been jettisoned from the ranks of investment-grade credits this year. Just four junk-rated companies have been promoted to investment grade.

The credit changes, tracked by Moody’s Investors Service, show just how much the economy has faltered. It also shows that even healthier high-yield credits will require a much more vigorous economic environment to achieve investment-grade status.

Indeed, three of the upgrades didn’t reflect better economic times, only that the companies had been acquired in mergers. That leaves just one company to receive an upgrade on its business fundamentals. That company is Amazon.com.

“Other than Amazon, what’s missing are upgrades stemming from enhanced fundamentals such as an improved outlook for sales and a widening of profit margins,” said John Lonski, manager director of Moody’s Credit Market Economics. “In an environment like this, acquisition is still the main driver for upgrades.”

Alltel Communications, First Allmerica Financials Life Insurance and Barr Laboratories were acquired by Verizon Communications’ Verizon Wireless arm, Commonwealth Annuity & Life and Teva Pharmaceuticals, respectively. As a result, their bond ratings were upgraded to investment-grade level.

In the most recent quarter, no companies have been upgraded. Moody’s records show the previous record low was two upgrades–in the second quarter of 2008.

Amazon’s second-quarter financial statements reflected “the company’s very strong balance sheet, healthy operating performance, and good liquidity,” according to Moody’s.

As the dollar value of acquired U.S. companies plunged 53% in 2008 and fell 35% for this year through May, Lonski predicted that the potential for more “rising star” upgrades through M&A will keep diminishing.

> Unfortunately i think "good" ( if you want to call the ratio 1:44 good.... ) news like this will be the exception.... Will be interesting to see if at least one media outlet will spin this as a sign that the green shoots are still here....... :-)

> Bin mir ziemlich sicher das solch "gute" ( wenn man das Verhältnis 1 zu 44 gut nennen möchte ) Nachrichten auch weiter die absolute Ausnahme bleiben werden....... Trotzdem nicht ganz auszuschließen das sich zumindest ein Medienvertreter findet der dies als Beleg für den absurden "Green Shoots" Wahn verwendet....... :-)

Yann Arthus-Bertrand - HOME

2009-06-05T03:46:00.000-07:00

Time for a break from the usual stuff ......If you don´t know who Yann Arthus-Bertrand is you just have to watch the following photo galleries ( see Gallery Boston Globe & Gallery Stern ) .... After watching the galleries i think it is a safe bet that you will gobble up his first film .....

Höchste Zeit den Blick mal wieder auf das Wesentliche zu konzentrieren..... Solltet Ihr Yann Arthus-Bertrand bisher nicht gekannt haben empfehlen ich mal einen Blick in die nachfolgenden Fotoserien zu werfen ( siehe Poto Gallery Boston Globe & Photo Gallery Stern )..... Danach bin ich mir sicher das kaum einer auf seinen ersten Film verzichten möchte....

Here the trailer

Hier erstmal der Trailer

Here the link to the entire film ( will work to June 14th..... So if you loved it spread the link around quickly....)

Hier nun der Link zum kompletten Film ( Link ist bis zum 14. Juni gültig... Sollte Euch das Spektakel gefallen haben bitte mit der Verbreitung beeilen......)

HOME - The Movie

Have a nice weekend.....

Allen ein schönes Wochenende.....

Disclosure: LONG GREEN ENERGY

Investors Are More Enthusiastic About The Industry's Future Than Bank Executives Are.....

2009-06-03T21:17:00.000-07:00

With insider buying at ZERO this is quite an understatement..... But it is definitely good news for the taxpayer....... Let´s hope that not too many pension funds got involved in the latest offerings.....This is especially true when you see some other ( now former ) "strategic" investors are slashing their holdings ( see here & here )......

Wenn man bedenkt das kein einziger Bankinsider seit dem Stresstest eine einzige Aktie gekauft hat dürfte die Überschrift gelinde gesagt ne kleine Untertreibung sein..... Immerhin sind das gigantische Nachrichten für den arg gebeutelten Steuerzahler..... Bleibt nur zu hoffen das nicht allzu viele Pensionskassen an den letzten Aktienemissionen teilgenommen haben.... Das gilt umso mehr wenn man bedenkt das ehemalige Ankerinvestoren Ihre Bankenbeteiligungen im großem Stil auf den Markt schmeissen ( siehe hier & hier )......

WSJ

Banks are having an easy time dialing for dollars.

J.P. Morgan Chase & Co., Morgan Stanley, American Express Co. and regional bank KeyCorp said Tuesday they sold a combined $8.7 billion in common stock. That pushed the total value of shares sold by the 19 financial firms that were stress-tested by the government to at least $65 billion since the results were announced May 7.

At the 15 stress-tested banks that have raised capital by selling stock to the public, no senior executives have recently reported buying shares themselves

I have to repeat what i have said in early May...

Let´s hope that the banks that have passed the test are able to attract as much "smart money" as fast ( window of opportunity probably short lived ) as possible...The taxpayer needs a break.....

Kann nur meinen Kommentar vo Anfang Mai wiederholen.....

Bleibt zu hoffen das zumindest die Banken die den Test bestanden haben in der Lage sind genügend "Smart Money" schnell genug ( befürchte das die Bedingungen nicht dauerhaft so gut sein werden ) einszusammeln.... Der Steuerzahler kann dringend etwas Hilfe gebrauchen .......

Report No Evil....... "Geithner´s Trip To China Edition"

2009-06-03T03:26:00.000-07:00

Probably not the way to stop the crashing circulations ( & to rebuilt the lost reputation from the disastrous Iraq coverage )...... I hope the Gartman term " The American media is, and continues to be, “in the bag” for the Obama Administration." is a bit overstated. But after reding reports like Geithner gets passing grade for China trip via Marketwatch i can understand his "concerns".....

Normalerweise wäre die Tatsache das Geithner als er vor chinesischen Studenten über die Werthaltigkeit der chinesischen US$ Anlagen referierte und dabei lauthals ausgelacht worden ist eine dicke fette Schlagzeile ( zumindest in den eingängigen Wirtschaftsnachrichten ) wert..... Komisch nur das dieser "Knaller" de facto kaum erwähnt worden ist. Schlimmer noch... Der Besuch wurde allenthalben als Erfolg gewertet ( siehe stellvertretend Geithner gets passing grade for China trip via Marketwatch ). Sicher nicht der beste Weg um die seit der Irakberichterstattung eh schon stark beschädigte Reputation zu erhöhen bzw. die crashenden Verkäufe zu stabilisieren..... Die ganze Entwicklung ist mehr als bedenklich......

Dennis Gartman via FT Alphaville

Which brings us to Dennis Gartman’s observations regarding US Treasury Secretary Timothy Geithner’s trip to Beijing this week. As we reported here, Geithner’s attempts to reassure Beijing authorities that the US government was still upholding a strong US dollar policy were met with loud laughter by an audience of students at Peking university.

This fact, apparently, went mostly unreported among the US press according to Gartman. As he surmises:

The utter and harsh reality of the US present fiscal circumstance is that the world is laughing at the Obama Administration’s handling of it. Mr. Geithner is the global vicar of the US fiscal policy, and never, ever in our lifetime have we seen or heard of a US Treasury Secretary being laughed at… until now. It is one thing to be derided; it is entirely another to be laughed at, and the US is now being laughed at.

And regarding the US coverage of the event, he writes:

What is even sadder, however, is that the American press missed the importance of this incident completely. As noted, other than the initial one sentence comment that was cursory in nature by The NY Times, nowhere else was this laughter noted by the domestic press.

The American media is, and continues to be, “in the bag” for the Obama Administration. The American media reported only that the Treasury Secretary made his case; explained the Administration’s position; informed China of the safety of its investments in US Treasury securities and moved on to his next meetings with China’s President and Prime Minister.

As far as the US media was concerned, Mr. Geithner’s speech was a rousing success when instead it was a laughable and utter failure.
The American media hid the importance of what happened there in Beijing from the American people, and we believe the media did so cognisant of what it was not reporting… a sin of omission rather than of commission, but a sin nonetheless.

Update Blogroll & Credit Tigthening "Monty Python Style"....

2009-05-30T22:20:00.000-07:00

It´s about time for another update......

Es ist mal wieder an der Zeit für ein Update. Ich möchte hier besonders auf den wohl besten deutschen Wirtschaftsblog Querschüsse von Steffen Bogs hinweisen. Einfach großartig! Zudem konnte ich mir nicht verkneifen Extra 3 - Die einzige Satiresendung in die Liste mitaufzunehmen. Meine absulute Lieblingssendung. Warum.....? Guckt Euch diesen Bericht zu Karstadt an ...... :-)

A Fistful Of Euros

China Financial Markets / Michael Pettis

Extra 3 - Die einzige Satiresendung

Mr. Mortgage / Field Check Group

Querschüsse

RGE Monitor

William Buiter´s Maverecon

Zero Hedge

The Day After The Bond Marked Tanked....Must Read Report From Mr. Mortgage / Field Check Group

2009-05-28T20:31:00.000-07:00

I have said a few weeks ago Ben, You Have A Problem......".... The problem has not gotten smaller......Get ready for QE 2.0......... Version 1.0 worked wonders for at least two weeks.....No wonder Gold has a chance for a breakout ( via Zero Hedge ). I highly recommend to read the entire piece and visit Mark Hanson & his Field Check Group site on a regular basis. Excellent stuff!

Vor einigen Wochen habe ich bereits getitels Ben, You Have A Problem....... Sieht so aus als wenn aus dem großen ein wirklich großes Problem geworden ist.....Wenn man weiß wie beschränkt Bernanke in seinem Denken ist gilt es als abgemachte Sache das wir uns auf eine massive Ausweitung des Quantitve Easing ( Notenpresse ) gefasst machen können. Macht ja auch Sinn wenn man sieht wie "toll" der erste Versuch funktioniert hat...... Da verwundert es wenig das Gold kurz davor ist "auszubrechen" ( via Zero Hedge ). Empfehle den kompletten Report zu lesen und den regelmäßigen Besuch von Mark Hanson und seiner Field Check Group Seite. Hier gibt es ungelfilterte "Bodenberichte" von der Hypotheken und Immobilienfront.

bigger / größer Thanks to Karl Denninger

5-28 - Potential Consequences of 5.5% Mortgage Rates Mr. Mortgage / Field Check Group

Mortgage Rates - It Could be as Bad as You Can Imagine

With respect to yesterday’s in the mortgage market — yes, it is as bad as you can imagine. No call can be made on the near-term, however, until we see where this settles out over the next week of so. If rates do stay in the mid 5%’s, the mortgage and housing market will encounter a sizable stumble. The following is not speculation. This is what happens when rates surge up in a short period of time - I lived this nightmare many times.

Yesterday, the mortgage market was so volatile that banks and mortgage bankers across the nation issued multiple midday price changes for the worse, leading many to ultimately shut down the ability to lock loans around 1pm PST. This is not uncommon over the past five months, but not that common either. Lenders that maintained the ability to lock loans had rates UP as much as 75bps in a single day.

Jumbo GSE money — $417k - $729,750 — has been blown out completely with some lender’s at 8%.
I have seen it all in the mortgage world — well, I thought I had.

A good friend in the center of all of the mortgage capital markets turmoil said to me yesterday “feels like they [the Fed] have lost the battle…pretty obvious from the start but kind of scary to live through it … today felt like LTCM with respect to liquidity.”

The consequences of 5.5% rates are enormous. Because of capacity issues and the long time line to actually fund a loan in this market, very few borrowers ever got the 4.25% to 4.75% perceived to be the prevailing rate range for everyone.

A significant percentage of loan applications (refis particularly) in the pipeline are submitted to the lenders without a rate lock.
This is because consumers are incented by much better pricing to lock for a short period of time…12-30 day rate locks carry the best rates by a long shot. But to get this short-term rate lock, the loan has to be complete enough to draw loan documents, which has been taking 45-75 days over the past several months depending upon the lender’s time line.
Therefore, millions of refi applications presently in the pipeline, on which lenders already spent a considerably amount of time and money processing, will never fund.
Furthermore, many of these ‘applicants’ with loans in process were awaiting the magical 4.5% rate before they lock — a large percentage of these suddenly died yesterday. From the lows of a month ago to today, rates are up 20%.

To make matters worse, after 90-days much of the paperwork (much taken at the date of application) within the file becomes stale-dated and has to be re-done with new dates — if rates don’t come down quickly many will have to be canceled out of the lender’s system.

To add insult to near-mortal injury, unless this spike in rates corrects quickly, a large percentage of unlocked purchases and refis will have to be denied because at the higher interest rate level, borrowers do not qualify any longer. For the final groin kicker, a 5.5% rate just does not benefit nearly as many people as a 4.5%-5% rate does. Millions already have 5.25% to 5.75% fixed rates left over from 2002-2006. .....

With respect to banks, mortgage banks, servicers etc, under-hedging a potential sell-off with the Fed supposedly having everybody’s back was a common theme. Banks could lose their entire Q2 mortgage banking earnings and middle market mortgage banker may never recover or immediately have to close shop

Lastly, consider sentiment — this is a real killer. This massive rate spike may have invalidated hundreds of billions spent to control the mortgage market literally overnight.

This leaves the mortgage and housing market very vulnerable.

Mortgage loan officers around the country are having a very very bad day today explaining to their clients why their rate was not locked and how rates are going to come right back down. They are also taking calls from borrowers with locked loans to confirm that the loan is indeed locked, inquiring as to when it will be approved or fund, and to rush the process in order to fund the loan by end of the lock-in term. This creates a customer service log-jam that chews through lender capacity quickly making the loan process even longer. Loans with second mortgages that need to be subordinated, are in a world of their own. Essentially, everything becomes a rush. Subsequently, loan officers will not feel like getting too aggressive taking new loan applications at least for the next month unless this corrects quickly.

Press surrounding this event will be the talk of Main Street immediately and cast a serious doubt over the housing recovery story that has been the common theme for months. An overnight housing market sentiment killer wildcard is something that nobody was factoring in.

We have to see where all this settles over the next few days before making a near to mid-term call on the outright damage because at this point, Fed or Treasury shock and awe is almost certain — another common theme has been ‘if it doesn’t work throw much more money at it’.

Obviously they have been following this closely for the past few weeks, as conditions began to deteriorate, and have likely been waiting to see where the upper range was before shocking in order to get maximum benefit…that would be a humongous short squeeze in Bonds driving rates lower. The problem is…if they do shock her and it is sold into with the same fury that we have been seeing, there may not be an act two.

The bond and mortgage market got complacent with the ultimate in moral hazard’s — the Fed’s got my back. Complacency is a killer.
Where we stand in two weeks in unknowable......

No Kidding..... S&P Is Acting Responsible & Threatens To Blow Up Fed´s CRE Bailout Stunt Via TALF

2009-05-26T23:41:00.000-07:00

Pobably the most underreported news from yesterday... The timing of the move ( a tsunami is not an overstatement ) makes it even more remarkable..... To put this in context lets remember that last week the Fed has continued with the "war on taxpayers" and has decided to bail out large parts of the commercial real estate complex ( see Fed Bends Over Backward For CMSA, Will Feed Inflation Capacitor With More Toxic Garbage via Zero Hedge ). The only precondition was....

Kaum zu fassen das gerade die Ratingagentur S&P verantwortungsvoll ( wenn auch einige Quartale zu spät ) reagiert und das Offensichtliche ausspricht. Praktisch alle in den letzten Jahren vergebenen Kredite die durch gewerblich genutzte Immobilien abgedeckt sind drohen analog dem privaten Wohnungsmarkt zu implodieren. Das besondere ist der Zeitpunkt der Ankündigung..... In der letzten Woche hat die Fed in der gewohnt verantwortungslosen Art und Weise beschlossen einen Großteil der gewerblichen Immofinanzierung mit Steuergeldern zu einem Bailout zu verhelfen der aufgrund der schieren Größe des Sektors leicht & locker die 100 Mrd $ übersteigen könnte ( siehe Fed Bends Over Backward For CMSA, Will Feed Inflation Capacitor With More Toxic Garbage via Zero Hedge ). Wenn man nun noch den heutigen Treasury Crash hinzunimmt dürfte das nachfolgende Bild nicht wirklich übertrieben sein........ :-)

An "AAA" rating.....

Die einzige Voraussetzung zur Teilnahme an der Party war ein AAA geratetes Papier....

Current Ratings: As of the TALF loan closing date, the CMBS must have a credit rating in the highest long-term investment-grade rating category from at least two TALF CMBS-eligible rating agencies

Should be no surprise to see that the Fed is deperate to get this kind of crappy collateral with exploding delinquencies onto their balance sheet......Just in time........ Make sure you see more "encouraging" CRE charts via Realpoint / Zero Hedge. Interesting to see that Realpoint is also a "TALF CMBS-eligible rating agency". Judging from their charts & comments it is unlikely that they will "help" the Fed...... Add todays Treasury Crashand i think the picture from Bernanke is even more spot on....... :-)

Inzwischen sollte es keinen mehr überraschen das die Fed eine der am schnellsten implodierenden Anlageklassen auf Teufel komm raus in Ihre Bilanz holen möchte..... Wie dramatisch schnell sich die Lage im gewerblichen Bereich verschlechtert verdeutlichen diese Charts via Realpoint zeigen. Diese Charts sind umso aussagekräftiger wenn man bedenkt das Realpoint ebenfalls zum ausgewählten Kreis der 5 Ratingagenturen gehört denen es erlaubt ist die CMBS zu raten. Nach allem was ich bisher von denen gelesen habe dürften die Kopfschmerzen der Fed eher noch zunehmen.........

bigger/größer

S&P To Downgrade Most Of 2005-2008 CMBS Classes, Derails TALF For CMBS

It is likely that the proposed changes, which represent a significant change to the criteria for rating high investment-grade classes, will prompt a considerable amount of downgrades in recently issued (2005-2008 vintage) CMBS.
Classes up through the most senior tranches of outstanding deals (so-called "A4s," "dupers," or "super-duper seniors") are likely to be affected. Our preliminary findings indicate that approximately 25%, 60%, and 90% of the most senior tranches (by count) within the 2005, 2006, and 2007 vintages, respectively, may be downgraded

Once more i have to quote Tyler ( the man who needs obvioulsly no sleep ) from Zero Hedge.....

Einmal mehr muß ich Tyler ( der Mann braucht anscheinend keinen Schlaf ) von Zero Hedge....

"And all this just days after the government had finally drafted what it hoped was the last and final version of its TALF term sheet. Lets rewind: in the May 19th version of TALF, in order the be eligible, CMBS "must not have a rating below the highest investment-grade rating category from any TALF CMBS-Eligibile Rating Agency." Throw in a downgrade of 90% of the 2007 vintage and it's time to go back to the drawing board.....
Basically, the impending downgrade would make Super Duper CMBS ineligible for TALF
It is a safe bet that the Fed will come back as soon as a week from today and announce TALF 364.7, in which the requirement for a current AAA rating is eliminated altogether.
In fact, as I speculated (jokingly), anything rated Default or higher will soon be perfectly eligible collateral for taxpayer funding. Because that's just how good a fiduciary of taxpayer money the Federal Reserve is."

> I think he is right..... Another stunt could be that the other agencies ( TALF CMBS-eligible rating agencies are DBRS, Inc., Fitch Ratings, Moody’s Investors Service, Realpoint LLC and Standard & Poor’s ) with Realpoint the exception ( see earlier link ) are as "helpful" as always and won´t issue any downgrade until the TALF is working and the most toxic stuff is already on the Fed´s balance sheet......

> Nach meinen Erfahrungswerten was die Fed angeht dürfte Tyler recht haben..... Eine weitere Möglichkeit wäre allerdings auch das die anderen zugelassenen Ratingagenturen(TALF CMBS-eligible rating agencies are DBRS, Inc., Fitch Ratings, Moody’s Investors Service, Realpoint LLC and Standard & Poor’s ) wie bisher beide Augen verschliessen und mit Ihren Downgrades "hilfreich" warten bis TALF implementiert und die "giftigsten" Papiere bereits in der Fedbilanz gelandet sind..... Möchte Realpoint ( siehe vorherigen Link ) von meiner Kritik ausdrücklich ausschließen

What happens if an ABS that was eligible for TALF financing is downgraded by an NRSRO?
Nothing happens to existing TALF loans secured by that ABS. However, the ABS may not be used as collateral for any new TALF loans until it regains its status as eligible collateral.

I highly recommend the blog Zero Hedge ( soon on my blogroll ). Here is much more from Tyler on the CMBS topic. UPDATE: Report: $75 billion of CMBS Market Capitalization Lost in Two Days

Ihr merkt schon das ich den Blog Zero Hedge für extrem lesenswert halte ( findet sich demnächst sicher auch auf meiner Blogroll wieder ). Empfehle zudem die gesammelten Werke von Tyler zu diesem Thema. UPDATE: Report: $75 billion of CMBS Market Capitalization Lost in Two Days

Chart Of The Day - " 90 Day Delinquency Rates In Spanish RMBS"

2009-05-19T21:34:00.000-07:00

One or two more quarters and the 2008 vintages are already catching up with 2005....Let´s hope the ECB with their € 60 billion QE in covered bond purchases ( Update : ECB Said to Have Debated 125 Billion-Euro Asset Package in May ) isn´t getting as reckless as the Fed ( for their latest latest stunt see Fed Bends Over Backward For CMSA, Will Feed Inflation Capacitor With More Toxic Garbage via Zero Hedge ) or the spanish central bank with their brilliant move in selling gold to buy spanish mortgages ( see here).....

Noch ein oder zwei Quartale und die 2008er Daten der "überfälligen" Hypothekenzahlungen werden bereits die für das Jahr 2005 locker hinter sich gelassen haben.....Bleibt zu hoffen das die EZB mit Ihrem QE Versuch ( Kauf von € 60 Mrd Covered Bonds / Pfandbriefen UPDATE: ECB Said to Have Debated 125 Billion-Euro Asset Package in May ) zumindest nicht ganz so unverfroren und unverantwortlich agiert wie es die Fed ja momentan im Wochenryhthmus praktiziert ( siehe gestriges Beispiel Fed Bends Over Backward For CMSA, Will Feed Inflation Capacitor With More Toxic Garbage via Zero Hedge ). Wie bereits vorher berichtet ( siehe hier ) übertrumpft die spanische Zentralbank mit der Entscheidung Ihre Goldreserven zu vertickern und dafür in spanische Hypotheken zu investieren aber selbst Bernanke. Und das ist wirklich ne reife Leistung........ Geradezu Oscarverdächtig......

Hat tip FT Alphaville

With unemployment running close to 20 percent i think it is a safe bet that we are just starting to see the pain ( despite the relief from lower interest payments, almost 100 percent of mortgages have variable rates ( see European Mortgage Market / Percentage Of Variables Rates ) and the Spanish borrower is benefitting heavily from the 1% EZB rate ) But i doubt that this will lead to a much different outcome than in the US ( see A Delinquent Spike / Chart US Delinquencies ) .......

Dank einer Arbeitlslosenquote von knapp 20% dürfte hier demnächst eine Explosion an faulen Krediten fast garantiert sein ( und das trotz der massiven Entlastung durch die sinkenden Zinsbelastungen, im Gegensatz zu Deutschland werden fast 100% der Hypotheken variabel verzinst ( siehe European Mortgage Market / Percentage Of Variables Rates ). Es gibt europaweit wohl kaum eine Kreditnehmergruppe die mehr vom momentanen 1% Leitzins der EZB profitiert , ich denke das selbst dieser Fakt ein ähnliche Entwickluung wie in den USA ( unbedingt den Chart angucken A Delinquent Spike / Chart US Delinquencies ) bestenfalls verlangsamen kann......

UPDATE: Scrutiny of Spain’s potential banking pain increases & Spanish banking pain, Caja Madrid RMBS edition

Caja Madrid - Spain’s second-largest savings bank - said it would skip EUR1.12m in interest payments on residential mortgage-backed securities due to soaring defaults on the underlying home loans.
Caja Madrid issued its RMBS II bonds in 2006....

When defaults reach 18.3 percent, all investors except for those in the highest-ranked notes will be cut off, according to Standard & Poor’s. About 16 percent of the underlying mortgages are now either in arrears by more than 90 days or have already defaulted, S&P data show.
Caja Madrid has sold 9.2 billion euros of mortgage-backed bonds since 2006 in four transactions, according to data compiled by Bloomberg. The lender packaged home loans it made to borrowers at the peak of Spain’s 14-year real-estate boom

Spain Bubble Watch

For a decade, the Spanish housing sector enjoyed uninterrupted growth, as low interest rates encouraged borrowing. Average house prices have nearly quadrupled during the past 10 years. About 750,000 homes were built in Spain in 2006 -- more than in France, Germany and the U.K. combined.

More Green Shoots...... US Corporate Default Rate Edition

2009-05-19T05:16:00.000-07:00

Green Shoots as far as the eye can see......... The "Green Shoots" or "Second Derivitive" nonsense will vanish as fast as the other buzz words like "Contained" , "Decoupling", "Cash On The Sidelines" , "Stock Are Cheap" etc......

Noch mehr Futter für all diejenigen die in jeder veröffentlichten Zahl momentan Green Shoots erkennen ..... Just kidding...... Bin mir sicher das die Bezeichnungen "Green Shoots" oder "Second Derivative" sich nahtlos in die Reihe der letzten Modebezeichnungen ( "Contained", Decoupling", "Cash On The Sidelines" usw ) einreihen werden. Warum wundert es mich eigentlich nicht das alle permanent suggerieren das das nun der Zeitpunkt gekommen ist einzusteigen.....

Thanks to Telegraph

FT Alphaville S&P said on Monday the US corporate default rate had hit a seven-year high:

Corporate defaults continue to rise rapidly in 2009, nearly matching the number in all of 2008. Through May 13, 2009, 121 issuers defaulted, affecting debt worth $297.22 billion. By comparison, 126 defaults were recorded in all of 2008, affecting debt worth $433 billion. Of the 121 defaults in 2009, 85 are from the U.S., 21 are from emerging markets, seven are from Europe, six are from Canada, and one each is from Australia and Japan.

Nice to see that markets are allowed to work in at least some parts of the market........Now add the following chart & read examples like this ( see Another Private Equity Deal That Went Bust Within 24 Months ) and you get even more green shoots.... Sarcasm off......

Immerhin schön zu sehen das dem Markt zumindest in einigen ausgewählten Teilen der Wirtschaft erlaubt wird zu arbeiten....... Der nachfolgende Chart kombiniert mit Beispielen wie diesem lassen erahnen das hier in der nächsten Zeit noch die ein oder andere nette Überraschung auf uns wartet.......

Number Of The Day " Percentage Of US Companies With A Junk Rating"

About 50% of U.S. companies have below-investment-grade credit ratings

The Destructive Implications of the Bailout - Understanding Equilibrium - Hussman

2009-05-18T04:03:00.000-07:00

Nothing really new on the "War On Taxpayers" but when Hussman is almost ranting ( by his standarts ) it should be worth a few minutes of your time... If you want to hear his comments on the “cash on the sidelines” myth go and read the entire link .....

Nichts wirklich neues in dem von mir bezeichneten "War On Taxpayers" aber wenn einer wie Hussman einen für seine Verhältnisse fast schon bemerkenswerten "Gefühlsausbruch" zeigt ist das allemal einen zweiten Blick wert..... Empfehle zudem den kompletten Link. Der beinhaltet u.a. noch den ein oder anderen Kommentar zu dem täglich neu verbreiteten Mythos das es haufenweise “cash on the sidelines” gibt.......

The Destructive Implications of the Bailout - Understanding Equilibrium
One of the features that has enabled the bureaucratic abuse of the public during the past year has been the frantic, if temporary, flight-to-safety by investors. The Treasury has issued an enormous volume of debt into the frightened hands of investors seeking default-free securities. This has allowed the Treasury to finance a massive and largely needless transfer of wealth to bank bondholders so easily over the short-term that the longer-term cost has been almost completely obscured.

But by transferring wealth from those who did not finance reckless loans to those who did – providing monetary compensation without economic production – the bureaucrats at the Treasury and Federal Reserve have crowded out more than a trillion dollars of gross investment that would have otherwise have been made by responsible people in the coming years, shifted those assets to those who have proven themselves to be irresponsible destroyers of capital, and have planted the seeds of inflation that will cut short any emerging recovery.

The Fed has turned its balance sheet into a garbage dump, in order to accommodate all of the additional Treasury issuance required to finance the rescue of bank bondholders. UPDATE: SPEAKING OF GARBAGE....... Fed to Add Older CMBS to TALF in July, Allow More Ratings Firms

The bottom line is that the attempt to save bank bondholders from losses – to provide monetary compensation without economic production – is not sound economic policy but is instead a grand monetary experiment that has never been tried in the developed world except in Germany circa 1921.

This policy can only have one of two effects: either it will crowd out over $1 trillion of gross domestic investment that would otherwise have occurred if the appropriate losses had been wiped off the ledger (instead of making bank bondholders whole), or it will result in a stunning and durable increase in the quantity of base money, which will ultimately be accompanied not by a year or two of 5-6% inflation, but most probably by a near-doubling of the U.S. price level over the next decade

As I've noted previously, the growth rate of government spending is better correlated with subsequent inflation than even growth in money supply itself, particularly at 4-year intervals.

Regardless of near-term deflation pressures from a continued mortgage crisis, our present course is consistent with double digit inflation once any incipient recovery emerges.

> Thanks to the commercial real estate, credit card & corporate debt crisis & massive overcapacity etc i think the recovery leading to rampant (CPI ) inflation is still at least 24-36 months away.... As long as the US $ is not weakening significantly.......

> Dank der zusätzlichen Krisen in allen Lagen der Kreditvergabe ( gewerbliche Immobilien, Kreditkarten, Unternehmen, massivste Überkapazitäten usw ) denke ich das trotz der verantwortungslosen Bailouts die Phase extremer Konsumentenpreisinflation noch mindestens 24-36 Monate entfernt ist..... Bin mir bei den Amis allerdings nicht ganz so sicher..... Ein schnell fallender US$ könnte allerdings den Zeitplan gewaltig durcheinanderwirbeln....

Gold & The Wisdom Of Central Bankers

2009-05-06T22:27:00.000-07:00

After a few weeks it´s about time for another post on gold. The first chart showing the "private investment demand" comes via The Mess That Greenspan Made and is a good addition to the last graph observing the "behavior" from the central banks during the past decade. It´s also worth noting that one of the best performing hedge funds over the past few years has allocated "quite a bit" of the portfolio to gold ( see Paulson & Company's golden portfolio )

Nach einigen Wochen ist es mal wieder Zeit für ein Goldposting. Der erste Chart der den gewaltigen Anstieg der "privaten Investoren" mittels der Gold ETF´s anzeigt kommt von Tim und seinem Blog The Mess That Greenspan Made und ist eine gute Ergänzung zur letzten Grafik die sich mit dem Verhalten der Zentralbanken in einem ähnlichen Zeitraum befasst. Besonders hervorzuheben ist noch das einer der am besten performenden Hedge Fonds der letzten Jahre einen nicht unwesentlichen Teil des Portfolios in Gold hält ( siehe Paulson & Company's golden portfolio )

The following graph via Option Armageddon gives the explanation why despite soaring investment demand and decreasing central bank sales gold hasn´t moved higher. And with collapsing jewelry demand ahead this headwind will likely continue for some time to come.

Die nachfolgende Grafik via Option Armageddon zeigt sehr schön warum Gold trotz massiver Investmentkäufe ( alle ETF´s zusammengenommen halten momentan die sechstgrößten Goldreserven / China hat sich dank der letzten Käufe gerade wieder auf Platz 5 geschoben ) und gleichzeitigen Verkaufsvolumen der Zentralbanken Gold nicht höher gelaufen ist. Und da die Nachfrage aus dem Schmucksektor momentan im Crashmode ist dürfte dieser Gegenwind noch eine Weile anhalten.

But with quoptes like the following the demand structure will shift even more quickl in the favor of investment.....

Ich denke angesichts Zitaten wie diesem dürften sich die Nachfragegewichte demnächst massiv verschieben....

A policy mistake made by some major central bank may bring inflation risks to the whole world. As more and more economies are adopting unconventional monetary policies, such as quantitative easing, major currencies’ devaluation risks may rise.

- People’s Bank of China quarterly report, May 6 (via Bloomberg) via FT Alphaville

Gold sales cost Europe’s central banks $40bn FT
Europe’s central banks are $40bn poorer than they might have been after they followed a British move taken 10 years ago on Thursday to shrink the Bank of England’s gold reserves, analysis by the Financial Times has shown.

London’s announcement on May 7 1999 that it would sell a large share of the Bank’s gold reserves in favour of assets offering a return, such as government bonds, was the high water mark of so-called “anti-gold” sentiment among European central banks.

Many of these banks, such as those in France, Spain, the Netherlands and Portugal, decided later in 1999 to follow Britain and sell off their reserves. At that time, gold was worth around $280 an ounce, less than a third of its current level of more than $900.

European banks sold about 3,800 tonnes of gold, reaping about $56bn, according to calculations from official sales data and bullion prices.

> Here an extra piece on Brown and his epic mistake

> Weil es so schön ist und uns Brown leider noch immer viel zu oft in den Medien begegnet ein extra Link zum epochalen Versagen....... Aber eigentlich genügt ein Blick auf den Chart......

Gold: Does Gordon Brown's regret selling half of Britains' gold reserves 10 years ago?

Taking into account the likely returns from the investments in bonds, the banks have gained another $12bn. But because today’s gold prices are far higher, they are about $40bn poorer than if they had kept their reserves

The biggest loser is the Swiss National Bank which sold 1,550 tonnes over the decade and at today’s gold prices is $19bn poorer, followed by the Bank of England, which is $5bn poorer.

The UK Treasury on Wednesday defended its decision to sell gold as a way to diversify reserves and cut risk. “As a result of the programme, a one-off reduction in risk of approximately 30 per cent was achieved,” it said. The Swiss National Bank declined to comment other than to say that it did not plan to sell more gold.

However, central bankers are confident that over the long run their move out of gold and into bonds will pay off and reduce the volatility of their portfolios, people familiar with their thinking said. Analysts also argue that because some banks had more than 90 per cent of their assets in gold, some disposals were warranted.

The proportion of European reserves held as gold remains extremely large even after years of sales, at an average of about 60 per cent, compared with the world average of 10.5 per cent.

After 10 years of steady sales, Europe’s gold sales are set to slow to their lowest levels since 1999, while central banks outside Europe have already become net buyers of gold.

The US, the world’s biggest holder of gold, decided not to follow Europe’s move. Germany and Italy are the only two big European central banks which did not follow the UK, mostly because of domestic disputes about what to do with the proceeds.

> Looks like Spain´s central bank is "desperate" ...... Selling gold to buy hyperinflated covered bonds backed by toxic Spanish real estate.... Brilliant!

> Sieht ganz so aus als wenn die spanische Zentralbank sich dem unrühmlichen Beispiel von UK und der Schweiz anschließt...... Anders kann man die Tatsache das Gold verkauft worden ist um den hyperinflationierten Covered Bond Markt ( der durch nicht gerade werthaltige spanische Immobilien gesichert ist ) zu stützen nicht bezeichnen......

Banco de España has already been delving into the covered bond market with money from gold-sale proceeds FT Alphaville

Barclays Capital on Wednesday morning cites Spain’s Expansion newspaper on a report that Banco de España has already been delving into the covered bond market with money from gold-sale proceeds .
We note that the latest available data, as reported to the IMF for March, show that Spanish gold holdings at end-March were 9.054mn oz, unchanged since end-July 2007. That said, it should also be noted that Spain slashed its gold holdings during 2005-2008: from 16.826mn oz at end-2004 to 9.054mn in July 2007.

"Cleaner Graph"

I think this piece from Jesse The US Dollar Rally Will End in a Crisis of Confidence isn´t "unrealistic"......

Ich denke das die Message aus dem nachfolgenden Link via Jesse The US Dollar Rally Will End in a Crisis of Confidence eher früher als später zum Tragen kommen wird......