Sun 2010-01-31 11:43 EST

Hussman Funds - Weekly Market Comment: The Stock Market Has Never Been This (Intermediate-Term) Overbought - October 19, 2009

In reviewing the status of the market late last week, the condition of the data was something of an anomaly in that regard. On the valuation front, stocks are presently overvalued, but to levels that we've observed at least several times in history. The anomaly relates to market action, where we can no longer find a single historical instance where stocks were more overbought on the combination of short- and intermediate-term measures we respond to most strongly. Indeed, only one instance comes close, which is November 28, 1980...the peak of the furious advance in S&P 500 driven by enthusiasm over "less bad" economic news, though with little proven economic strength. It was the last day of the 1980 bull market. The economy later proved to have been in a short lull within a double-dip recession, taking stocks to their final lows in 1982...One of the notable features of extreme overbought conditions is that investors rarely have much opportunity to get out...

2009; Hussman Funds; intermediate term; October 19; Overbought; stock market; weekly market comments.

naked capitalism Mon 2009-12-28 16:40 EST

Will Continued Stealth Bailout of Housing Produce Unwanted Side Effects?

The Treasury Department...considerably increased its Freddie and Fannie safety net, by removing all limits on the amounts on offer (an increase from a ceiling of $400 billion) and simultaneously allowing the two GSEs to increase their balance sheets near term. Previously, they had been required to shrink their portfolios by 10% per annum; now it is their ceiling which will be lowered by 10% a year, and that ceiling is much higher than their current exposures ($900 billion versus roughly $760 billion for Freddie and $770 billion for Fannie as of the end of November)...So one has to conclude that the agencies might well (ahem, are likely to) throw their firepower behind the ``prop up the mortgage market'' program, particularly with Obama's ratings plunging and mid-term elections coming this year. But if this comes to pass, what might the collateral damage be?

Continued Stealth Bailout; Housing Produce Unwanted Side Effects; naked capitalism.

Calculated Risk Wed 2009-11-25 11:38 EST

Fannie Mae: $18.9 Billion Loss, Requests Another $15 Billion

CalculatedRisk

Press Release: Fannie Mae Reports Third-Quarter 2009 Results Fannie Mae (FNM/NYSE) reported a net loss of $18.9 billion in the third quarter of 2009, compared with a loss of $14.8 billion in the second quarter of 2009. ... Third-quarter results were largely due to $22.0 billion of credit related expenses, reflecting the continued build of the company's combined loss reserves and fair value losses associated with the increasing number of loans that were acquired from mortgage backed securities trusts in order to pursue loan modifications. ... As a result, on November 4, 2009, the Acting Director of the Federal Housing Finance Agency (FHFA) submitted a request for $15.0 billion from Treasury on the company's behalf.

15; 18; 9; Calculated Risk; Fannie Mae; losses; requesting.

Wed 2009-11-25 09:59 EST

Hussman Funds - Weekly Market Comment: "Should Come as No Shock to Anyone" - November 16, 2009

John P. Hussman

The big picture is this. There is most probably a second wave of mortgage defaults in the immediate future as a result of Alt-A and Option-ARM resets. Yet our capacity to deal with these losses has already been strained by the first round that largely ended in March. The Federal Reserve has taken a massive amount of mortgage-backed securities onto a balance sheet that used to be restricted to Treasury securities. The purchase of these securities is reflected by a surge in cash reserves held by banks. Not only are the banks not lending these funds, they are contracting their loan portfolios rapidly. Ultimately, in order to unwind the Fed's position in these securities, it will have to sell them back to the public and absorb those excess reserves, so to some extent, the banking system can count on losing the deposits created by the Fed's actions, and can't make long-term loans with these funds anyway. Increasingly, the Fed has decided to forgo the idea of repurchase agreements (which require the seller to repurchase the security at a later date), and is instead making outright purchases of the debt of government sponsored enterprises (GSEs such as Fannie Mae and Freddie Mac). Again, the Fed used to purchase only Treasuries outright, but it is purchasing agency securities with the excuse that these securities are implicitly backed by the U.S. government. This strikes me as a huge mistake, because it effectively impairs the Fed's ability to get rid of the securities at the price it paid for them, should Congress change its approach toward the GSEs. It simultaneously complicates Congress' ability to address the problem because Bernanke has tied the integrity of our monetary base to these assets. The policy of the Fed and Treasury amounts to little more than obligating the public to defend the bondholders of mismanaged financial companies, and to absorb losses that should have been borne by irresponsible lenders. From my perspective, this is nothing short of an unconstitutional abuse of power, as the actions of the Fed (not to mention some of Geithner's actions at the Treasury) ultimately have the effect of diverting public funds to reimburse private losses, even though spending is the specifically enumerated power of the Congress alone.

2009; comes; Hussman Funds; November 16; shocks; weekly market comments.

Jesse's Café Américain Wed 2009-09-02 18:45 EDT

Russian Professor Panarin Sees US Following the Russian Collapse Model

Jesse

Professor Igor Panarin, whose book The Crash of America is just out, now claims that by November the book will be yesterdays news because the events described in it will have alrady come to pass.

Jesse's Café Américain; Russian Collapse Model; Russian Professor Panarin Sees.

Jesse's Café Américain Sun 2009-08-30 11:59 EDT

US Equity Markets Look Dangerously Wobbly As Insiders Sell In Record Numbers

Jesse

"Investors Intelligence's latest survey of advisory services showed an impressive 51% bullish and a meager 19% bearish...the spread hasn't been that wide since November 2007." Alan Abelson, Barrons, Aug. 29, 2009Next week we move into September, the riskiest month of the year for financial markets, with the federals escalating preparations for a flu pandemic, while Congress considers legislation... ``selling by corporate insiders in August has surged to $6.1 billion, the highest amount since May 2008. The ratio of insider selling to insider buying hit 30.6, the highest level since TrimTabs began tracking the data in 2004.''

Equity Markets Look Dangerously Wobbly; Insider sell; Jesse's Café Américain; record number.

Wed 2008-12-10 00:00 EST

Mish's Global Economic Trend Analysis: Case Shiller and CAR Analysis November 2008 Release

``extremely unlikely that housing bottoms anytime soon''

CAR Analysis November 2008 Release; Case-Shiller; Mish's Global Economic Trend Analysis.

Mon 2008-11-03 00:00 EST

Hussman Funds - Weekly Market Comment: Value Dinosaurs - November 3, 2008

capital gains tax treatments; ``bull markets and bear markets don't exist in observable reality only in hindsight''

2008; Hussman Funds; November 3; Value Dinosaurs; weekly market comments.

Sun 2007-12-02 00:00 EST

Speech, Bernanke --Deflation-- November 21, 2002

Deflation: Making Sure "It" Doesn't Happen Here; remarks by Governor Ben S. Bernanke, 2002-11-21; policy responses available to cure deflation; "Sustained deflation can be highly destructive...and should be strongly resisted"; Helicopter Ben orgin

2002; Bernanke; deflation; November 21; speech.

Mon 2007-11-12 00:00 EST

Hussman Funds - Weekly Market Comment: Expecting A Recession - November 12, 2007

2007; expectations; Hussman Funds; November 12; Recession; weekly market comments.