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I’m not a big fan of awards shows. The Oscars are the only one I’ll watch, because I’m a huge movie buff. As I was watching last night, I found it to be a very telling reminder as to the current state of my social life that the only two nominated films I had seen were the animated kids movie “Up” and “The Hangover”. That pretty much says it all. On a related note, I have seen “The Empire Strikes Back”, “Horton Hears a Who”, and “Come Home Snoopy Come Home” over 20 times apiece in the last year. The mere sight of Horton fills me with rage at this point.
As I was loading up my Netflix queue last night with all these films I am dying to see, I came to the quick realization that since I had my second child, I am adding movies to my queue way faster than I can watch them anymore. With a demanding bank job, two young kids, a wife, a Cleveland sports website, a DVR loaded with shows my wife and I are behind on, and a general sports addiction that leads to a lot of time spent watching baseball, basketball, and boxing on weeknights … the quick projections show that my Netflix queue will exceed 10,000 films by spring of 2011. And this doesn’t even factor in the night a week I just pass out at 9 PM due to the sheer exhaustion caused by the rigors of the aforementioned litany of things I immerse myself into.
As to the highlights of last night, it was pretty cool seeing Kathryn Bigelow being the first female to win Best Director, with ex-hubbie and fellow nominee James Cameron sitting right in of her. Winning Best Picture as well with a film (The Hurt Locker) that grossed just 12.6 million domestically (lowest ever for a Best Pic winner). And all four of the best actor/actress nods going to first timers, with the likable and talented Sandra Bullock and Jeff Bridges finally breaking through to win Best Actress and Best Actor.
A couple real nice free agent signings for the Browns yesterday. The team addressed two huge needs, inking offensive lineman Tony Pashos and linebacker Scott Fujita from the Saints. Pashos will more than likely replace John St. Clair as the team’s starting right tackle, and Fujita will probably play inside next to D’Qwell Jackson at linebacker in the team’s 3-4 defense.
Temperatures in the 50’s all week. Which is great. But all Clevelanders know what this is. It’s The Setup. Everything will be melted by Wednesday. We’ll probably get about 10 days of real nice weather. Just long enough to make everyone put their guard down, and begin to think winter is over here on the north coast. Then we’ll get that one last blast of snow. Could be later this month. Could be early April. Heck, as we saw two years ago, it could be on Indians Opening Day. But at least we can see the light at the end of the tunnel. I’m sick of sitting in my house.
Quote of the day …
“Did I really earn this? Or did I just wear y’all down?” ~ Sandra Bullock, after accepting her Best Actress Oscar for her role in ‘The Blind Side’
Market …
There’s no more anticipated economic news release than the monthly national employment figures. On the first Friday of each month, the US Dept of Labor releases the # of non-farm payrolls (AKA jobs) the economy added or lost in the previous month, and they also release the revised national unemployment rate. The latest release was last Friday morning at 8:30 AM.
And for the first time in some time, the news was better than expected.
Amid expectations that the economy shed another 70,000 jobs in February, and that the national unemployment rate would rise from 9.7% to 9.8% … we found out this past Friday morning that the economy lost only 36,000 jobs in Feb, and that the unemployment rate remained unchanged at 9.7%. Doesn’t sound like a huge miss, or something that should be getting investors too excited … but there’s just so much negativity right now in the markets surrounding employment. While the markets still trade off where the actual #’s come in related to economist expectations, nearly everyone is expecting the jobs #’s to come in worse than the econo-geeks are projecting. So any jobs # that comes in slightly better than expected is going to cause a more violent reaction than one that is slightly worse than expected.
Adding to the optimism? Dec and Jan’s job #’s were both revised slightly upward as well. With the revisions, and release of the Feb #, there have been no job losses these past three months. Also, the “underemployment rate” (includes part-time workers who prefer full-time jobs and people who want to work but have given up looking for a gig) fell from 16.8% to 16.5%. Baby steps.
At the end of the day, after a somewhat volatile week last week, spent waiting for the Friday’s jobs #, mortgage rates are right about in the same spot they were in a week ago. Mortgages sold off badly after the release of the jobs #, falling 16/32 (50 bps) almost immediately before rallying back to finish the Friday session down just 8/32 (25 bps). The Dow gained about 250 points last week, most of that on Friday after the employment report.
Light week for economic news. First time jobless claims on Thurs and Retail Sales on Fri are the highlights. Also, Treasury is auctioning off 74 BILLION in treasury bonds this week, which could put upwards pressure on mortgage-backed bonds and mortgage rates.
News …
~ Business Economists See Fed Rate Hike in 6 Months
http://www.cnbc.com/id/35758558
~ Senators Wrestle with Fed Bank Oversight Issues
http://www.cnbc.com/id/35759124
~ Obama to Appeal for Public Support on Health Care
http://www.cnbc.com/id/35759550
~ How Did the Employment Report Affect Mortgage Rates?
http://www.mortgagenewsdaily.com/consumer_rates/138619.aspx
~ Commercial Real Estate’s Challenges Evident in Cleveland’s Downtown Corridor
http://www.cleveland.com/business/index.ssf/2010/03/commercial_real_estates_challe.html
Note, the Daily Dish will be on a one week hiatus, and will return on Monday, March 8th.
Cavs/Celtics tonight, 8 PM on TNT … live from Beantown. Paul Pierce is expected to miss the game for the Celtics with an injured finger. The Cavs are back to full strength, but are still struggling to incorporate the newly acquired Antawn Jamison, and also Mo Williams, who has not been the same player since returning from the injured list. The Cavaliers are 5 games up on Orlando and 6.5 games up on Boston for the coveted #1 seed in the Eastern Conference.
We could be headed towards an epic rematch on Sunday between the American and Canadian hockey teams, this time with the gold medal on the line. The USA took care of business yesterday, beating Switzerland 2-0 behind another gem of an effort from goaltender Ryan Miller. And the Canadians won again, crushing the Russians 7-3 last night. On Friday, the USA plays Finland and Canada meets Slovakia. The winners will meet for the gold on Sunday.
Raising children is hard. And it’s a lot of pressure knowing everything you say and do on a daily basis is impacting the way your children will develop as people, and the values they will have as adults are the values you teach them when they are young.
Where am I going with this? My son is just past four and a half. He got a piggy bank as a baby from one of the grammas, and over the course of the last 4.5 years, he’s been saving money in there. I’ll give him my change after a fast food run. One of the grandmas will give him a dollar bill. The aunt from Arizona will mail him a $5 bill for Valentine’s Day. We counted it all up the other day. $164! And what does my son say? “Daddy, I want to take the money to your bank and keep it there so it stays safe.”
Aside from the personal pride that came from my son wanting to put his money in the bank instead of spending it on Ewok Villages, light sabers, and a replica Millennium Falcon ship … the statement also served as a reminder of the value of banks and the banking system here in America, and the important role they serve. Over the last couple years, the actions of a small minority have cast a cloud over the vast majority of us in the American banking system who legitimately want to do the right things for people and put them in a position to succeed, not fail.
Quote of the day …
“Opportunity is often difficult to recognize; we usually expect it to beckon us with beepers and billboards.” ~ William Arthur Ward
Market …
A mixed bag of economic news this morning.
Had two numbers released at 8:30 AM. Weekly first time jobless claims, which we get every Thursday morning. Last week’s # came in way higher than expected (473k vs. 445k expected); tempering enthusiasm in what was an otherwise positive week of news about the economy. This week, economists expected the # to fall to about 460k. It didn’t. It rose again, to 496k.
On the positive side of the ledger, we got a very positive report on January durable goods orders. Durable goods are big ticket items ordered by businesses that are considered to be useful for at least three years (such as vehicles, large appliances and computers.) The monthly release provides insight into demand as well as business investment. Companies willing to spend more on equipment and other capital are possibly experiencing sustainable growth and could be planning on greater production capacity. The Commerce Department reported that durable goods orders soared 3% in January against economist expectations of a 1.5% increase. However, it should be noted that most of the strength in the January # came from a 126% increase in volatile civilian aircraft orders.
Stocks snapped a two day losing streak yesterday after investors received the reassurance they wanted from Fed chairman Big Ben Bernanke in his semiannual testimony before Congress. Big Ben reaffirmed the Fed’s plans to keep interest rates low to help strengthen the economy, saying rates would remain at their current historically low levels “for an extended period” and that the Fed would need to start tightening “at some point”. He testifies again today. Financial stocks rallied on the news, helping push the Dow up 92 points. Mortgages sold off slightly.
Bernanke’s testimony overshadowed a disappointing report on new home sales yesterday morning. The seasonally adjusted annual rate of new home sales plummeted 11.2% to 309,000 last month, compared with a revised rate of 348,000 in December, the Census Bureau said. That’s a decline of 6.1% from January 2009. It was the lowest rate since the government began keeping records in 1963 and comes after declines in November and December. The drop surprised many industry analysts. Economists had expected January sales to rise to an annual rate of 354,000.
News …
~ Mortgage Rates May Not Rise Much When Fed Support Ends
http://www.cnbc.com/id/35563022
~ Jobless Claims Rise on Snow Related Layoffs
http://finance.yahoo.com/news/Jobless-claims-rise-on-apf-149273546.html?x=0&sec=topStories&pos=1&asset=&ccode=
~ Bernanke Eases Worries About Monetary Tightening
http://www.cnbc.com/id/35560220
~ Durable Goods Orders Rise 3% in January
http://finance.yahoo.com/news/Durable-goods-orders-rise-3-apf-4244775010.html?x=0&sec=topStories&pos=2&asset=&ccode=
~ Royal Bank of Scotland Loses 5.5 Billion in 2009
http://finance.yahoo.com/news/Royal-Bank-of-Scotland-loses-apf-3306956103.html?x=0&sec=topStories&pos=9&asset=&ccode=
~ Geithner: No Changes to Fannie/Freddie Until 2011
http://www.cleveland.com/business/index.ssf/2010/02/spending_austerity_a_careful_b.html
~ Stock Futures Fall Over Jobless Data
http://finance.yahoo.com/news/Stock-futures-lower-on-Greece-rb-3796910159.html?x=0&sec=topStories&pos=main&asset=&ccode=
It’s such a defeating feeling. You finally start to see your driveway and front lawn emerge from the layers upon layers of snow fall we’ve seen this winter. And then we get slammed with another wave. This hasn’t been the coldest Cleveland winter, but I can’t remember looking at snow on the ground for this long a stretch.
The Cavs got back on track last night with a 105-95 win over the New Orleans Hornets that was tougher and closer than the final score would seem to indicate. It was a playoff-style win. The Cavs played pretty much a seven man rotation (Jamison started, Andy and Delonte off the bench, Hickson didn’t even play), really buckled down defensively late, and won the last five minutes of the game behind their star players. Good to see Delonte West really starting to look like the old Brotha Redz. He shut down Hornets rookie guard Marcus Thornton (who dropped 37 on us) late, and had a big block and a big three with about a minute left that helped seal it. Mo Williams on the other hand looks lost right now. He’s been a matador defensively all season and his effort and offensive game are very shaky right now as well.
Luckily for the Cavs they are still 5.5 games up on Orlando for the #1 seed in the East and have about 25 games to get everything clicking on all cylinders.
More trouble for Rich Rodriguez and Michigan. The NCAA has issued a notice of allegations to the University of Michigan alleging five major potential violations in its football program.
What a mess they have on their hands up there in that state up north. It’s just one thing after another, and it should be no surprise to anyone that’s followed Rodriguez’s career.
As much as I like to rag on Michigan, I respect the school and the institution. The way I was brought up, you cheer for the Buckeyes first and the Big Ten second. And that you should cheer for Michigan every week (I still struggle with that) to make the win over then in late November all the more meaningful and sweet. Also, as we’ve seen these last few years, a weak Michigan generally means a weak Big Ten.
It’s mind-boggling to me that they haven’t cut bait on Rodriguez yet, and at this point, it seems as if they are in denial about the situation. And it’s getting worse, one allegation at a time, as Rodriguez drags that once proud football program through the mud.
Quote of the day …
Bob: It gets a whole lot more complicated when you have kids.
Charlotte: It’s scary.
Bob: The most terrifying day of your life is the day the first one is born.
Charlotte: Nobody ever tells you that.
Bob: Your life, as you know it… is gone. Never to return. But they learn how to walk, and they learn how to talk… and you want to be with them. And they turn out to be the most delightful people you will ever meet in your life.
Bill Murray and Scarlet Johansson, as Bob Harris and Charlotte, talking about marriage and kids in the film “Lost in Translation”
Market …
Big news morning. All kinds of financial/housing sector related stories linked below.
Got a little rally in the bond markets yesterday after the release of the Consumer Confidence Index. Expected to come in at about 55.0, it came in well below that at 46.0, which was a ten-month low. Pessimism surrounding the labor markets/employment picture was the reason for the low reading. After the release, stocks went in the tank and treasury and mortgage bonds rallied. The Consumer Confidence Index is seen as one of the top indicators of near term consumer spending, which is the biggest component of the US economy. People are hunkered down right now and are not spending. Most of the growth to the “economic recovery” has been due to manual intervention by the federal government. Yesterday’s weak Consumer Confidence report was a reminder of those hard truths.
We also got the release of the Case-Schiller Home Price Index yesterday, which tracks monthly changes in the value of residential real estate in 20 major US cities. The index as a whole rose 0.3%, which was more than expected, and matched November’s 0.3% gain. Prices fell in just five of the 20 markets included in the survey, remained flat in one and rose in the other 14.
Two notable and potentially market moving events today: January new home sales report at 10 AM, and Big Ben Bernanke gives his semi-annual monetary policy report to the House Committee on Financial Services.
New home sales have been all over the board because of the first time homebuyer tax credit, which is fueling this #’s. We had a big push before the first purported deadline in the fall, then we’ve seen huge drop offs as the deadline was extended out the end of April 2010. In December the index dropped 7.6%, pushing the annual pace of sales down to 342,000. With homebuyers back in the market to take advantage of the tax incentive, economists are looking for the annual pace to climb to about 360k.
Bernanke is walking into a hornet’s nest at 10 AM. We’re in an election year, all kinds of financial reform is being bandied about, there’s the issue of when the Fed will start raising rates, and we’ve also got the huge issue of when the Fed is going to start to pull back on some of their manual intervention into the markets. The man is earning his money right now. And we’re at such a critical juncture. A premature exit from the Fed may cause the economy to slip back into recession from higher interest rates. On the other hand, waiting too long risks the outbreak of inflation and the emergence of bubbles from easy monetary conditions. Puts things in perspective the times we feel our jobs are stressful.
News …
~ Home Purchase Loan Demand at Lowest Level Since 1997
http://www.cnbc.com/id/35557374
~ Round Two: Bernanke Faces More Grilling From Congress
http://www.cnbc.com/id/35542268
~ Fed Officials Take Aim at Financial Reform Plans
http://www.cnbc.com/id/35553714
~ HUD Secretary Requests 41 Billion for 2011 Budget
http://www.mortgagenewsdaily.com/02232010_hud_secretary_proposes_budget.asp
~ FDIC Bracing for a Wave of Bank Failures
http://www.nytimes.com/2010/02/24/business/24fdic.html?adxnnl=1&adxnnlx=1267017717-m0Er0oboTY8OaKbovbJH+g
~ Geithner May Give Regulators Leeway in Applying Volcker Rule
http://www.bloomberg.com/apps/news?pid=20601087&sid=aieZ19R8J5HI&pos=1
~ SEC Mulling New Short Sale Restrictions
http://www.cnbc.com/id/35556407
~ Bank Stocks May Lag Market Before Rates Climb
http://www.cnbc.com/id/35542060
~ Stock Futures in Tight Range Before Bernanke Testimony
http://www.marketwatch.com/story/us-stock-futures-in-tight-range-before-bernanke-2010-02-24?dist=beforebell
Ahhh … baseball is back. Indians pitchers and catchers have reported to Goodyear, AZ and today is their first official workout.
When you live in a four season climate like Cleveland, one of the great things about the start of baseball season is that it also represents the beginning of our 7-8 month stretch of excellent weather. Lost in the complaining about our brutal winters is the fact we have the greatest summers here on the north coast. Temperatures between 75 and 85 almost every day and next to no humidity.
Also, there’s just something about the sport of baseball that makes everyone believe their team can win before the season starts. The Indians are widely expected to be a very bad team this year, with most of the early projections having the Indians lose between 90-100 games. The team is going to have a hard time selling tickets. I recently re-upped my 20 game season ticket plan, but was able to negotiate 20% off the price I paid last year, and also get four free tickets to Opening Day.
But none of that matters to me now. Right now I am convinced Westbrook can come back from elbow surgery, Carmona turns into the 2007 Fausto again, and Masterson and Huff become legitimate young arms for us … helping get the ball to Kerry Wood, Chris Perez, and Tony Sipp in the back end of the bullpen. I believe Matt LaPorta breaks out and hits 25 HR and drives in 95 runs, and that catching prospect Carlos Santana will bust on the scene in May to become Victor Martinez reincarnated for us. I believe Michael Brantley will emerge as the leadoff hitter he showed us he could be last September, moving Grady down to the three hole where he will stay healthy and thrive. I believe Shin-Soo Choo and Asdrubal Cabrera will continue their evolution into the next great Indians players, and get long term deals with the team after the season. I believe Travis Hafner will finally find a good masking agent for performance enhancing drugs so he can go back to hitting .350 and mashing 40 HR’s and driving in 140 RBI’s.
This is the time to believe Tribe fans. Cause it could be a loooooong season.
Quote of the day …
“Business is not just doing deals; business is having great products, doing great engineering, and providing tremendous service to customers. Finally, business is a cobweb of human relationships.” ~ Ross Perot
Market …
Slow start to the week. No economic news of note yesterday. Stocks and bonds both traded pretty flat all day.
Today we get consumer confidence at 10 AM (reading of 55.0 expected vs. last month’s 55.9 reading) and the Treasury auctioning off some two year notes at 1 PM EST. Also, and most notably, we get the release of the Case-Schiller Home Price Index today, which gauges home values in 20 major metropolitan areas, Cleveland included. Case-Schiller has evolved into pretty much the #1 authority on home values here domestically.
With little to no economic news to start the week, the markets are trading off earnings. The latest round saw both Home Depot and Sears report slightly better than expected earnings. Both retail giants credited reduced expenses and slightly better than expected sales as the reasons. Macy’s and Target report earnings today.
Investors are also awaiting Fed Chairman Big Ben Bernanke’s semiannual testimony before Congress about the health the economy. The Fed surprised investors last week by hiking rates it charges banks for emergency loans. Traders will want Bernanke to continue to provide reassurances that it plans to keep its benchmark rate at historic lows to encourage growth. He testifies Wednesday and Thursday.
News …
~ Earnings, Improving Economy May Fuel Rally
http://www.cnbc.com/id/35527522
~ State & Federal Borrowing is Crowding Out Everyone Else
http://www.cnbc.com/id/35524508
~ Home Depot Reports Quarterly Profit, Sales Fall
http://www.cnbc.com/id/35535407
~ Rates Mixed at Weekly Treasury Auction
http://finance.yahoo.com/news/Rates-mixed-at-weekly-apf-4072876156.html?x=0
~ Wall Street to Size Up Retailers
http://www.marketwatch.com/story/us-stock-futures-point-to-second-day-of-falls-2010-02-23?dist=beforebell
It just doesn’t get any more exciting than last night’s USA/Canada hockey game. The energy inside that building and on the ice was off the charts. And behind amazing individual performances from Brian Rafalski and goalie Ryan Miller, the Americans shocked the world (and the throng of Canadian hockey fans in attendance) and knocked off the host Canadians 5-3 in an absolutely thrilling affair that was America’s biggest hockey upset since The Miracle on Ice, and their first win in hockey over Canada since 1960.
Not a good Olympics for Canada so far. From the ominous start on the luge track to the funky weather, to the fact they have just 9 medals as a country, to last night’s loss to the Americans … it has been a major disappointment for the Canucks so far in Vancouver. For America on the other hand, it’s been a super Olympics. Dominance by the American ladies on the slopes, the comeback story of Bode Miller, Apollo Anton Ohno’s march into the record books, 24 medals in total to lead the games. And a win last night in hockey over the vaunted Canadians.
Spent the night in enemy territory Saturday night as my family and I went to Pittsburgh for my grandma’s 70th birthday. My sister and her boyfriend live there, and my gramma wanted to check out the new Rivers Casino, which recently opened right there in the heart of the city. Stayed right across the street from PNC Park, which is really a nice baseball stadium. Looking forward to taking a little roadie with my son there when the Tribe plays there the weekend of June 18-20. Also had dinner at a cool little restaurant called Atria’s, right inside PNC. There are some things to like about Pittsburgh. PNC Park, Yeungling, Station Square, and the general look and feel of the city, which is very hilly … which gives it a cool look, especially given some of the neat architecture there.
Some things I could live without: the one way streets, Heinz Field, everything in the city being colored black and gold (most miserable color tandem), and the fact that about 70% of all clothing worn by all the people there in that city has the Steeler logo on it. I could never live there for that reason alone. It’s just too much.
Quote of the day …
“Great moments… are born from great opportunity. And that’s what you have here, tonight, boys. That’s what you’ve earned here tonight. One game. If we played ‘em ten times, they might win nine. But not this game. Not tonight. Tonight, we skate with them. Tonight, we stay with them. And we shut them down because we can! Tonight, WE are the greatest hockey team in the world. You were born to be hockey players. Every one of you. And you were meant to be here tonight. This is your time. Their time is done. It’s over. I’m sick and tired of hearing about what a great hockey team the Soviets have. Screw ‘em. This is your time. Now go out there and take it.” ~ Kurt Russell, as US Olympic hockey coach Herb Brooks, from the movie “Miracle”
Market …
We saw stocks rally and mortgage rates push higher last week amid mostly positive economic indicators (low inflation, better than expected housing data) and earnings reports. Also, on Thursday, the Fed shocked the markets by raising the rate in their overnight discount window from 0.50% to 0.75%. The Fed made clear that this in no way reflected a change in broader monetary policy or its economic outlook, and that this was simply a return to more normal levels for one Fed tool now that the financial crisis has eased. As a result, there was very little impact on mortgage rates. According to Fed officials, a move to begin to tighten overall monetary policy, which almost certainly would cause a significant reaction, is still expected to be at least several months away.
Another significant development we got last week was the release of the minutes of the last Fed meeting, which revealed that “several” Fed officials favored starting the sale of the Fed’s MBS portfolio “in the near future.” Investors were not expecting that Fed MBS sales would begin any time soon. Simply put, adding to the supply of MBS being sold means that yields would need to move higher to attract buyers. Since mortgage rates are basically fueled by MBS yields, mortgage rates rose after the news.
This week’s economic slate gets off to a slow start with no releases of note today, and just consumer confidence tomorrow. On Wednesday we get new home sales data for Jan, on Thursday we get durable goods orders and first time jobless claims. On Friday we get preliminary 1Q GDP data, Chicago PMI, existing home sales data, and consumer sentiment. Also, on Wednesday, Fed honcho Big Ben Bernanke testifies before Congress.
News …
~ Mortgage Rates End Week on Three-Day Skid; Fed Rate Hike Not to Blame
http://www.mortgagenewsdaily.com/consumer_rates/135983.aspx
~ Poll: Economists See “Healthy Expansion” Under Way
http://finance.yahoo.com/news/Poll-Economists-see-healthy-apf-276308132.html?x=0&sec=topStories&pos=5&asset=&ccode=
~ Ex-US Treasury Secretaries Back Volcker Rule
http://www.cnbc.com/id/35516716
~ Lowe’s Profits Beat Estimates; Sees Sales Rising
http://www.cnbc.com/id/35518283
~ Gridlock is Good for Bernanke Dollar in Fight Over Rate Audits
http://www.bloomberg.com/apps/news?pid=20601087&sid=adW1eVcUJM4I&pos=4
~ Stock Futures Point Higher Amid Economic Optimism
http://www.marketwatch.com/story/stock-index-futures-point-to-higher-wall-st-open-2010-02-22?dist=beforebell
Well, it was fun while it lasted. The stay on Cloud Nine, the state of blissful happiness that I and many others found ourselves in after the Antawn Jamison trade came to a crashing halt last night as Carmelo Anthony buried a jumper in LeBron James’ face with 1.9 seconds left in overtime to lead the Nuggets to a win over the Cavs despite 43, 15, and 13 from King James. And Swerb heartthrob Lindsey Vonn crashed in the super-combined. Not a good night of television viewing.
The things kids say. My four year old son, long potty trained now, had a little accident the other day. But not according to him. When asked what happened, he insisted that he had not had an accident, and “was just sweating down there”. I couldn’t even be mad … that’s incredible creativity. Future CEO material there. My wife wanted to punish him. I wanted to see if I could get him started early at the Carnegie School of Business.
Ever have this happen to you? I’m walking across the street yesterday to get a bowl of soup and a salad at the fantastic “Soupermarket” here in Lakewood, and I hear “Hey! How’s it going?” No idea who the guy is. Guy starts chatting me up about how it’s been forever, asks how I’m doing, asking what I’ve been up to. I can’t place the guy. Who is this? I’m racking my memory … to no avail. About five minutes into the fifteen minute conversation, it becomes apparent: this guy thinks I am someone else, and I really don’t know him. Turns out this guy is a basketball coach at one of the area high schools, and he thinks I am one of his former players.
At this point, I have two choices. Tell him he’s mistaken, which ends things, albeit uncomfortably, and I’ve got a Market Greens salad with extra kalamata olives and a bowl of Mexican meatball soup within minutes. This is what most people would do. For some disturbed reason, I decide to go with it, and live this alternate identity for about ten more minutes. I’ve got to be careful not to expose myself, but I’m taking his leading statements and comments, and just going with ‘em. We’re hamming it up like old pals, cajoling about old teammates and good times in post-season tournaments, updating each other on our families.
It wasn’t until I got back to my office with my food until it hit me just how strange the whole situation was, especially my decision to role play the thing out. I’m telling you it’s this Keurig one-cup coffeemaker. After 5-6 cups of the Timothy’s Nicaraguan Blend, I’m ready to engage in a 15 minute conversation with a telephone pole.
Quote of the day …
”I’ve never won a championship, whether it was college, high school. I’ve been to All-Star games; I’ve experienced a lot of things. There’s only one thing left for me to achieve. It’s the one thing that keeps me going; it’s the one thing that drives me night in and night out. I said to myself, ‘It’s going to happen before I retire.’ I don’t have another five to 10 years left in this body. I’m just blessed to be put in this situation. ‘People always say, ‘Good things happen to good people,’ and that’s definitely a fact right now. I felt I’ve done things the right way and this is a great situation for me. I love what I do. I want to be the best. I want to hold that trophy up and be a part of something very special.” ~ New Cavalier Antawn Jamison
Market …
The financial markets got thrown for a little loop yesterday afternoon as the Federal Reserve surprised investors by raising their “overnight rate”, or “discount rate”, from 0.50% to 0.75%.
Before we get into why they did this and what the impact was and may be, let’s clarify the difference between the aforementioned “discount rate” and the “Fed funds rate”, because it is confusing. We hear news snippets all the time about the Fed raising and lowering rates. But there’s actually two different lending rates that the Fed puppeteers.
The Fed Funds rate is the rate you hear people talking about all the time. It is the interest rate at which private depository institutions (mostly banks) lend balances (federal funds) at the Federal Reserve to other depository institutions, usually overnight. In layman’s terms, it is the interest rate banks charge each other for loans. The Federal Open Market Committee (FOMC) cannot specifically set that rate, which seems confusing, because it is. They set a target. The target is currently “between 0.00% and 0.25%”. The actual federal funds rate is the weighted average of interest rates that banks charge each other. It’s set by open market competition but comes remarkably close to the target set by the Fed.
By law, banks need to keep a percentage of funds in reserve. If they don’t have enough funds, they borrow from other banks with excesses to meet this overnight requirement at a certain interest rate. This is the federal funds rate.
Another way banks can borrow funds to keep up their required reserves is by taking a loan from the Federal Reserve itself at the discount window at the “discount rate”, which was what was raised yesterday from 0.50% to 0.75%. These loans are subject to audit by the Fed, and the discount rate is usually higher than the federal funds rate. Another difference is that while the Fed cannot set an exact federal funds rate, it can set a specific discount rate, which they did yesterday. Make sense now?
So what does it mean? How will it impact the markets?
Primarily, what it signals is the beginning of the withdrawal of all the emergency measures we saw when the economy started to spiral into an abyss a couple years back and we saw all of this federal intervention into the markets. The Fed was sure to make clear yesterday that this move was a “normalization” of lending that wouldn’t affect monetary policy, and the main federal funds rate would remain low for an “extended period.” So while the headlines are filled today with scary talk about the “Fed raising rates”, which will likely prompt all kinds of questions from clients, really, it means little, and it’s effect on mortgage rates and the other financial markets will be minimal. In reality, “discount window” borrowing from the Fed is fairly limited. Institutions will often seek other means of meeting short-term liquidity needs.
In other market news this morning, the Labor Department reported that consumer prices (CPI) rose less than expected in January while prices excluding food and energy actually fell, something that hasn’t happened in more than a quarter-century. Consumer prices edged up 0.2% in January while prices excluding food and energy slipped 0.1%. That was the first monthly decline since December 1982.
The benign inflation news gives the Fed more time to keep interest rates at record-low levels to shore up the economy and should ease worries in financial markets that a Fed rate hike is more imminent. The news on consumer prices was better than expected, especially after a government report Thursday showed that wholesale prices shot up 1.4% in January.
News …
~ Fed Raises Discount Rate From 0.50% to 0.75%
http://www.cnbc.com/id/35465481
~ Fed Seeks to Calm Markets After Discount Rate Rise
http://www.cnbc.com/id/35473663
~ Fed Discount Rate Hike Signals End to Emergency Measures
http://www.bloomberg.com/apps/news?pid=20601087&sid=amj4X4IWKCys
~ Who’s Afraid of the Fed? Market Wants Rate Hikes …
http://www.cnbc.com/id/35462014
~ Obama Pushes For More US Housing Help
http://www.cnbc.com/id/35475552
~ Core Consumer Prices Fall in January
http://finance.yahoo.com/news/Consumer-prices-excluding-apf-1789869500.html?x=0&sec=topStories&pos=1&asset=&ccode=
~ Kmart to Close Five Stores in Ohio Including Locations in Cleveland, Eastlake, Wadsworth
http://www.cleveland.com/business/index.ssf/2010/02/kmart_to_close_5_stores_in_ohi.html
~ Fed’s Dudley Says US Economy is Growing With Low Inflation
http://www.bloomberg.com/apps/news?pid=20601087&sid=agjwdGHCduPM&pos=4
~ Stock Futures Down After Fed Rate Hike
http://finance.yahoo.com/news/Stock-futures-down-after-Fed-apf-2101723830.html?x=0&sec=topStories&pos=main&asset=&ccode=
Thank you Dan Gilbert. For opening your wallet and shelling out the tens of millions of additional dollars necessary for your general manager Danny Ferry to go out and acquire The Missing Piece, Antawn Jamison last night. And thank you Danny Ferry for never panicking, always weighing your options correctly, and making your fourth straight major trade in the last two years where the Cavs gave up nothing and added key pieces to this now very talented puzzle you’ve assembled. Let’s review The Balded One’s last four deals:
~ Laura Hughes’s awful contract and filler for Ben Wallace, Wally Sczerzbiak, Joe Smith, and Delonte West
~ Amon Ones (no D, no J) and the previously acquired Joe Smith for Mo Williams
~ The previously acquired Ben Wallace and filler for Shaquille O’Neal
~ One month of Zydrunas Ilgauskas and a #1 pick they can likely purchase back if they want for Antawn Jamison
If you didn’t already love Danny Ferry for being the only player in NBA history to throw a punch at Michael Jordan, you have to love him now. Wow!
Make no mistake Cleveland sports fans. This is, by far, the city’s best opportunity to end the 46-year drought and bring a professional sports title here to the north coast. I don’t want to get ahead of myself here, ‘cause this is Cleveland, but these next four months are going to be enthralling. I’m talking 8-10 cups of Keurig coffee a day and prep the wife that you’re going to be a very bad husband for four months enthralling.
Antawn Jamison is the perfect fit for this basketball team. He is a man of incredibly high character that cares about winning first and everything else later. He can stretch the floor and knock down 18-20 foot jump shots. He is still highly productive and is signed for the next two seasons. He is a very intelligent player that does a lot of the little things at both ends of the floor that don’t show up in the box score. He can rebound. He can defend. He is an All-Star forward. I still have nightmares of him destroying Drew Gooden in past Cavs/Wizards matchups.
If LeBron is being truthful in saying that he will be motivated only by championships when deciding who to sign with this summer, then he won’t be going anywhere. No moving trucks. His family, friends, and support system here in Cleveland. A championship team that has the ability to win multiple titles together. And the full-fledged support of a very rich owner and very competent general manager.
Lastly, on Z. Yes, it is very sad to have to deal him. There is no better guy. No one more deserves (well, maybe LeBron) to be able to hoist that Larry O’Brien trophy above his head as millions of Clevelanders weep openly over a Cavaliers championship. But he can come back if he wants in 30 days if the Wizards buy his contract out, as they are expected to. Other teams (Dallas and Denver) are already rumored to have interest, and he could sign with them immediately, and for more money than the Cavs would likely be willing to give him. Or he can take a month off, go nowhere, hang out with the two kids he just adopted, eat at Lola every night, and come back and join this team in late March as they prepare for their quest for the Larry O’Brien.
After successfully predicting the Saints upset win in the Super Bowl and the Jamison acquisition (when everyone else thought Amar’e) right here in the Dish, as a public service to Dish readers, here are the numbers for tomorrow night’s Mega Millions drawing:
11, 19, 23, 38, 40. Bonus ball will be 36.
And you know the Cavs trade is big news when it relegates Lindsey Vonn winning a gold medal to this slot in The Dish. I was already a fan. The gold elevates her to Scarlett Johansson/Giada De Laurentiis status here at Dish Headquarters.
Quote of the day …
“Antawn is a great pro. We are very excited to have an experienced all-star player of Antawn’s caliber and character join us. He has the ability to add a special, unique dimension to our team with a strong inside presence and the ability to stretch teams defensively, while impacting the entire court. We think he matches the culture we have built, and continue to build, and will fit well with our group on the court and off.” ~ Cavaliers GM Danny Ferry, on his new toy, Antawn Jamison
Market …
Same old story. Just when we get some positive momentum going to the markets, the train gets derailed. Maybe that’s a little harsh. Maybe the train’s not off the tracks yet, but we got some setback news this morning when we found out that first time jobless claims unexpectedly surged last week and that inflation jumped far more than expected in January.
Let’s start with first time unemployment claims. Came in at 440k last week. Had been trending down. Expectations were for that to continue, and a # of about 430k this morning. Comes in at 473k. Ouch. The labor market, hardest hit by the worst recession in seven decades, has lagged the economic recovery that started in the second half of 2009. The economy has lost 8.4 million jobs since the start of the downturn in December 2007. First time claims is kind of like our weekly update/indicator on the health of the employment market. And this morning’s was not good. No way to sugar coat it.
On the inflation front, the Labor Department said this morning that the Producer Price Index (PPI) rose by 1.4% in January. Expectations were for a 0.8% rise. The more closely watched “Core PPI” (which extracts volatile food and energy prices) rose by 0.3% amid expectations of a 0.1% rise. Investors are keeping a wary eye on inflation following massive efforts by the Federal Reserve to pull the economy out of its worst slump since the Great Depression of the 1930’s. Low capacity utilization and a weak labor market are, however, keeping inflation pressures in check. Nothing to worry about yet here, but the # now has investor’s attention.
Mortgages went in the tank yesterday afternoon after the release of the minutes from the latest Fed meeting. The minutes revealed that “several” Fed officials favored starting the sale of the Fed’s MBS portfolio “in the near future.” Investors were not expecting that Fed MBS sales would begin so soon, and many were even holding out hope that the Fed would stay in the MBS market as buyers, not sellers … so clearly, you can see why it had the impact it did on mortgages.
Is this the start to the climb for mortgage rates? Are we headed towards 30 year fixed rates in the high fives, approaching 6.00% after years now of rates between 4.75%-5.25%? The best long term thing for the US economy and potential future inflationary fears is to let rates rise naturally and to exit the MBS markets as buyers. But there’s a lot of political pressure for more federal intervention to manually keep rates low and help out upside down homebuyers, especially in the wake of the generally ineffective last year of results from the mortgage modification program. It will be VERY interesting to see how things unfold.
Yesterday was another positive day for the stock markets (Dow rose 40 points) though. Deere & Co. and Whole Foods both reported strong profit, and the government said construction of new homes and industrial production rose more than anticipated in January. Prior to this morning’s bad news, stocks had been surging thanks to positive earnings reports and diminished concern about potential overseas troubles derailing a global economic recovery. Investors have been worried debt problems in Greece and other European countries could spread and stymie a global economic rebound.
News …
~ Cavs Acquire Antawn Jamison in Three-Team Trade with Wizards & Clippers
http://www.nba.com/cavaliers/news/trade_100217.html
~ Jobless Claims, Inflation Jump as Economy Wobbles
http://www.cnbc.com/id/35457298
~ One Year Later, Obama Defends Economic Stimulus Plan
http://www.reuters.com/article/idUSTRE61G38U20100218?type=GCA-Economy2010
~ Mortgage Modification Program Has Had Little Effect
http://www.marketwatch.com/story/obama-loan-modification-effort-languishes-2010-02-17?reflink=MW_news_stmp
~ Wal-Mart Sales Fall Short of Expectations; Outlook Cautious
http://www.cnbc.com/id/35442486
~ Bond Vigilantes Say EU Needs Better Plan For Greece
http://www.bloomberg.com/apps/news?pid=20601087&sid=a3FR4vFtRUaY&pos=6
~ Stock Futures Fall After Jobs, Inflation Reports
http://finance.yahoo.com/news/Stock-futures-fall-after-jobs-apf-3803927760.html?x=0&sec=topStories&pos=main&asset=&ccode=
The Cavalier Nation sits on the edge of their collective seats. Deal? Or no deal? Here’s where it looks like things stand:
Cavs # 1 preference is Amar’e Stoudemire. They have an offer out there to Phoenix. J.J. Hickson, Zydrunas Ilgauskas, and a 1st round draft pick. It also looks as if talks have intensified with Washington. The rumored deal the Cavs have out there with the Wizards is Zydrunas Ilgauskas, Jamario Moon, and a #1 pick for Antawn Jamison and veteran point guard Mike James. In both deals, the Cavs would likely be able to resign Big Z after 30 days, at which point he would be bought out by the team he is dealt to. Fallback position for the Cavs appears to be Indiana’s Troy Murphy and/or the LA Clippers’ Corey Maggette, both of who could probably be had for Z’s expiring contract and filler.
A couple weeks ago I mentioned that I bought one of those Keurig one-cup coffeemakers and how much I love the thing. Things are starting to get out of hand though. I just bought a second one for my office, and am now up to 6-10 cups of coffee a day. Here’s an actual e-mail correspondence yesterday between me and my buddy Paul, who I now blame for this evil addiction:
Swerb: Just so you know, you’ve created a monster. Now have a second Keurig in my office. I’d ask you if there was a 1-800# help line, but my right hand is shaking too badly to dial the phone.
Paul: That’s hilarious because my brother (who also works with me) got a Keurig with his wife for X-Mas and the two of us have debated getting one and bringing it into work so we could have it during the day. Our rationale NOT to was that we’d be sucking down 7-8 cups of coffee a day too. I’m due an “upgrade” for my machine because of accumulated points from Keurig.com and we may just be bringing the old one here to the store. Welcome to the party pal.
Swerb: I’m saving all these emails … I think I may be able to implicate you in a lawsuit when I perish from caffeine withdrawals the next time I am forced to be away from one of my Keurigs for 24 hours straight.
Paul: “One of my Keurigs” is possibly the best line I’ve read in a while. You know about the version for your car, right?
Swerb: There’s a car Keurig?
Paul: Calm down, just kidding. You know how this works now … you have to get someone else hooked.
Swerb: You mean kind of like how married guys encourage all their buddies to get married? Try and bring others into “our world”?
Paul: You’re a quick study my young apprentice.
Swerb: Alright, I’m going to throw together a Keurig Power Point and get it out to some people I feel may be susceptible. While enjoying a fresh brewed cup of the Tully’s extra bold Kona blend.
Quote of the day …
“People ask me what I do in winter when there’s no baseball. I’ll tell you what I do. I stare out the window and wait for spring.” ~ Rogers Hornsby
Market …
Upbeat tone to the markets this morning, thanks in large part to a better than expected housing starts # for January. Housing starts represents the number of residential homes construction has begun on during each month. When the shovel goes in the ground … that’s a housing start. The report serves as a future indicator of future new home sales 6-9 months down the road. Also, new home sales mean people have to buy things to put in them, so it also serves as an indicator on some level for consumer spending, by far the biggest component of the US economy. Needless to say, the housing start #’s have not been robust these last few years:
But the January numbers were better than expected. Work began on 591,000 houses at an annual rate last month, up 2.8% from December, figures from the Commerce Department showed today in Washington. Expectations were that housing starts would come in at about 570-580k. Housing starts have now risen 21.1% in the past year, the largest year-over-year increase since April 2004.
In other news yesterday on the homebuilding front, The National Association of Home Builders said yesterday that its housing market index rose two points in February, a sign that low interest rates and federal tax credits are boosting demand for new homes. The builders group said the index reached 17 in February, after falling for two consecutive months. The increase may also signal builders are feeling better about their prospects following data that the job market could be improving. Meanwhile, interest rates for mortgages are hovering around 5 percent, pushed down by the Federal Reserve’s program to buy mortgage-backed securities. And, builders say they are seeing the effects of the tax credits of up to $8,000 for first-time buyers and $6,500 for current homeowners who move.
Yesterday was a big day for the stock market, as the Dow jumped 170 points. Overseas debt concerns eased, and more focus was put on domestic affairs. At least for now, encouraging jobless claims # last week, better than expected earnings reports, and some positive economic news has instilled a positive tone to the markets. Good for stocks, not so good for safe haven fixed income investments like treasuries and mortgages. The mortgage-backed securities markets are in slow-bleed mode right now.
News …
~ Housing Starts Post Sharp Rebound
http://finance.yahoo.com/news/Housing-starts-post-sharp-rb-4278026676.html?x=0&sec=topStories&pos=main&asset=&ccode=
~ Mortgage Apps Down Even as Rates Near Record Lows
http://www.cnbc.com/id/35435909
~ Biden Defends Stimulus, Slams “Dysfunctional” Congress
http://www.cnbc.com/id/35436578
~ Home Builder Confidence Increases in February
http://www.cleveland.com/business/index.ssf/2010/02/homebuilder_confidence_increas.html
~ Shadow Inventory Still a Concern; Reason to Extend Fed’s MBS Program?
http://www.mortgagenewsdaily.com/02162010_s_amp_p_shadow_inventory_still_a_concern_reason_to_extend_fed_s_mbs_program.asp
~ Mortgage Delinquencies Soar in Fourth Quarter 2009
http://247wallst.com/2010/02/17/mortgage-delinquencies-soar/
~ Stock Futures Up After Housing Starts Data
http://www.bloomberg.com/apps/news?pid=20601087&sid=amJsbmz9JyFk&pos=2
The trade winds are swirling hard in Cavalier Land. This weekend, speculation intensified that the Cavaliers would indeed make a major trade, and Phoenix Suns big man Amar’e Stoudemire was at the center of most of those rumors.
Adding a guy like Stoudemire to this team is scary on paper. He just turned 27, has already been to five All-Star games, and he’s averaging over 21 points a game and just under 9 rebounds. With the double teams that LeBron and Shaq draw, and the three point shooters we have (best in the league shooting the three), it’s terrifying to ponder the havoc Amar’e could wreak here on the north coast. Already the favorites to win it all, if the Cavs could pull this trade off, they would have an incredible chance to end this city’s 46 year pro sports championship drought.
Amar’e is more of a risk/reward proposition than the other guys (Antawn Jamison, Troy Murphy) are rumored to be interested in … mostly due to the fact that he can opt out of his deal at year end and become a free agent. But it appears this is a risk Danny Ferry is willing to take, hoping that the Cavs can win a title, resign Amar’e, and then resign LeBron … pairing two of the league’s young superstars in the hopes of bringing a string of championships here to C-Town.
I do see the Suns trading Amar’e. And I do believe the Cavaliers will make a trade before Thursday’s deadline. It may not be Amar’e to Cleveland though. The Cavs allegedly have the same deal (Hickson, Ilgauskas, and potentially a draft pick) on the table with the Wizards for Jamison and with the Pacers for Murphy if the trade with Phoenix falls through. Me personally, I think Amar’e lands in Miami, who is desperate to make a big splash deal to ensure Dwayne Wade stays there. And I think the Cavs will end up with Jamison, who would be a fantastic fit here.
We may know today. Phoenix has a game tonight and seems eager to get this distraction behind them. Exciting times Cavs fans.
With most of the upper half of America snowed in their homes, the Winter Olympics got big time ratings this weekend. After the ominous beginning that saw a Georgian luger perish during a practice run Friday morning, it was a pretty compelling weekend of action.
Amongst the highlights? America taking the medal lead with 8 after the first three days of action, including gold medals in snowboarding (Seth Wescott) and freestyle skiing (Hannah Kearney), a dramatic silver/bronze finish in the short track speed skating event for Apollo Anton Ohno and J.R. Celski, and a bronze medal from Bode Miller … who successfully bounced back from a huge disappointment four years ago when he came in as the favorite and partied away his chances to follow up his stellar efforts in Salt Lake in 2002.
And Vancouver … what a beautiful city. One of the top five places I’ve never been to that I’d love to visit along with Italy, Hawaii, Boston, and Seattle. The aerial shots have been stunning. Some of the shots of that city are as made for HDTV as Lindsey Vonn is.
Can’t wait for the men’s hockey, which starts today. And the aforementioned Ms. Vonn’s events.
Quote of the day …
“I play very well with Shaq. I averaged more points last year with him and played better defense. You guys can stop saying we don’t play well together.” ~ Amar’e Stoudemire, last night on Twitter
Market …
It was a much needed long weekend for the financial markets. There’s just been so much to digest over the past month. The Bernanke reconfirmation, a Fed meeting, Fed speculation, a slew of potential policy changes for the Federal government on banking and housing, all this talk about the deficit and unemployment, and a non-stop stream of economic indicators and fourth quarter earnings releases and 2010 projections from American companies.
After peaking at about 10,800 on Jan 19, the Dow went in the tank … falling 1,000 points before rallying back a little last week to end the week at right around 10,100.
One of those weekends, I had my Blackberry shut off for a big chunk of it. Enough is enough sometimes. Just as a Blackberry needs recharged, the mental batteries need it as well from time to time.
So what’s going on this week? It’s a short week, but another busy one. Let’s start with the economic news that will be released:
Today – NY Empire State Index
Tomorrow – Housing Starts, Import Prices, Industrial Production, and the release of the minutes from the last Fed Meeting
Thursday – Jobless claims, PPI (Producer Price Index), Leading Indicators, and the Philly Fed Index
Friday – CPI (Consumer Price Index)
The big ones are PPI and CPI, the two main gauges of inflation here domestically. While inflation is believed to be well in check, PPI and CPI are always big releases for the fixed income investment worlds of mortgages and treasuries, as inflation eats away at their fixed returns. And first time weekly jobless claims, which are released every Thursday morning at 8:30 AM EST, have really been in the spotlight as of late due to the rampant unemployment problem here in America. The report is seen as foreshadowing of the immediate future on employment, which the markets are trading hard off of right now.
Earnings reports over the past month have mostly been better than expected, but have not been strong enough to overcome overseas concerns about growing debt problems in countries like Greece, Portugal, and Spain. With investor concerns about Greek debt easing somewhat, the focus might start to return to domestic growth. Helping matters early this week were very strong earnings reports this morning from food giant Kraft and retail giant Abercrombie & Fitch.
News …
~ Youngstown Area to Get 350 New Jobs When Steel Tube Plant Opens
http://www.cleveland.com/business/index.ssf/2010/02/youngstown_area_to_get_350_mor.html
~ Barclays 4Q Profit Soars Eight Fold on Unit Sale
http://finance.yahoo.com/news/Barclays-Q4-profit-soars-apf-3890344017.html?x=0&sec=topStories&pos=8&asset=&ccode=
~ Lenders Fret as Dubai’s Real Estate Situation Worsens
http://www.cnbc.com/id/35407245
~ Blackberry Maker RIM Warns of Bandwidth Crisis
http://www.cnbc.com/id/35417684
~ Stock Futures Stronger After Three Day Break
http://www.marketwatch.com/story/us-stock-futures-stronger-after-three-day-break-2010-02-16?dist=beforebell
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