Freddie Mac auction draws plenty of bidders
July 14, 2008 - 5:32pm By STEPHEN BERNARD AP Business Writer
NEW YORK (AP) - Freddie Mac attracted more bidders Monday for a highly anticipated auction of $3 billion in short-term securities than it had nearly all year, a day after the federal government provided support for the mortgage giant.
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The bid-to-cover ratio was 3.73, its highest rate since Jan. 14.
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Aug 19:
Investors took Freddie Mac's sales of $3 billion five-year reference notes positively as foreign investors still showed up to bid on the auction even amid renewed worries over the viability of the federally chartered Fannie Mae and Freddie Mac. Financial weekly Barron's this week reported that a U.S. government bailout of the two mortgage-finance giants is increasingly likely.
Freddie Mac had to jack up yields to entice investors, however. It sold the notes at 113 basis points over comparable Treasurys, the highest premium it has ever offered for a five-year note. The notes yielded 4.172% at sale.
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The appetite for US debt is waning. The last leg of the stool.
Wal*mart Requiem
In addition to being downright evil Wal*mart is in fer a whoopin' because its business model broke this year. Cheap transportation and municipal "assistance" for but two legs on their stool are gone, not wobbly, gone. Another leg of their stool, how about cheap goods from China? Oooops. How's that workin' fer ya Ghost of Sam? I can see it in their pricing structure of different goods segments. DVDs cost 4¢-10¢ to manufacture.
Rights/distribution for places like Wal*mart are a buck or two or three maybe. These have room for using price points to draw and they are. Bins in the aisle full of second rate movies $4 and $5 each. But, slide on over to spark plugs or light bulbs and there is no margin left to cut. Those are little items. Last year big mold blown plastic toys (kiddie teahouses or forts) were inexpensive. This year, let's see; Chinese wage inflation, oil product materials input, transportation, handling. All saw monster price inflation. Christmas this year may not be an orange and new sneakers but it sure ain't gonna be like 2002 either.
Two final points on the evil octopuses' tentacles getting chopped off. They bought a whole lotta CRE for themselves and as anchor (them) adjacent investment in the boom years. Those two don't look so hot going forward. Lastly, is the most important but least quantifiable. Their business model generally relies on externalizing costs and internalizing control. For decades they've been clearcutting and strip mining supplier expertise for uncompensated export to "other" unnamed countries with fewer restrictions on things like human rights and pollution controls. American businesses are wising up to this transfer of expertise and its true costs.
Labels: business
Mandatory Olympic Post
Am I the only one that thinks the stadium looks like a bidet wrapped in barbed wire?
Labels: snark
It’s time to get another part time job as a Chippendales model to tide me over until next year!
Fortunately John and I have worked together and I have to say...
Seriously, this asshat has been wrong and lying and misleading and arrogant and downright fascist for years and what does he have to asay about the results of that behavior?
No, without comments my blog is an efficient content management system. Or better yet, it’s a better blog, because now it’s a place where someone who takes credit or blame for his work writes something that may or may not be credit-worthy or blame-worthy. Indeed, as we learn from Joel on Software, a blog is very much a blog without comments, at least according to the guy who invented them.
The most disheartening development over the past few weeks, however, has not been the prevention of anonymous drivel, but the seasonal downturn in the number of web site inquiries from real people.
Sacramento real estate is known by people like this.
Labels: snark
Roiling Donuts
Shanps called this to my attention:
Fed says foreclosures will sweep exurbs next
Minneapolis / St. Paul Business Journal - by Jennifer Niemela Staff Writer
Woodbury, Plymouth, Apple Valley and Minnetonka — communities usually associated with wealth and prosperity — may become foreclosure trouble spots, according to an analysis by the Federal Reserve Bank of Minneapolis.
The predictions are based on the number of adjustable-rate subprime mortgages that will reset in 2008. When the interest rates reset on those mortgages, also known as ARMs, monthly payments go up. Many of those borrowers, already squeezed by rising gas and food prices, will be more likely to go into foreclosure. Within the nine-county metro area in Minnesota, the Fed has identified more than 30 ZIP codes where the percentage of subprime ARMs that will reset in 2008 is between 34.9 and 50. This means those areas likely will be the next washed over by the foreclosure wave.
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Banks and lenders have plenty of financial data about their customers, so they can easily predict when a borrower might get into trouble. However, because of confidentiality and liability issues, they can’t freely share that information with nonprofit organizations that are trying to help borrowers either as financial counselors or as mediators between borrowers and lenders. Nonprofits have struggled to play catch-up with the waves of foreclosures that have already hit some parts of the metro area and Greater Minnesota.
“Quite candidly, we’re all about two to three years behind the curve,” Hanson said. “There’s no sign on people’s door that says, ‘I’m behind on my mortgage.’ ”
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Emerging pattern
The pattern that emerges from the data is that the foreclosure wave started in the central cities will mostly skip the first-tier suburbs, then hit the exurbs next, Grover said.
“It’s like a doughnut,” he said.
The first-tier suburbs may have more stability because home values didn’t increase as quickly as in the exurbs, and because they have a higher rate of mortgages that are paid off, Grover said. “That’s where homeowners have been there a long time and there hasn’t been a lot of housing development.”
There's several interesting ideas being floated here. First is their reluctant and sideways acknowledgment that the core areas are suffering first. They aren't really but always remember the context of reportage. Urbanists with big city imaginations even when those big cities are Minneapolis / St. Paul.
To reiterate; the places worst hit are/will be primarily the most recent and most expensive relative to long term values. That means those McMansions in Corona but it also mean those luxocondos in downtown. Secondarily it is/will be the places least like the SRF with white picket fence and those who were purchased for whatever reason 2003-2007 with less than 80% LTV conventional loans.
There's no subregional preference being revealed here. It is all bubble and squeak.
Labels: Housing
Freddie Mac auction draws plenty of bidders
