Wednesday, December 30, 2009

Home mortgage delinquency rates keep rising

Delinquency rates keep rising for home mortgages. Calculatedrisk blog provides the details and they are universally not good.  As you can see from the chart, delinquency rates have skyrocketed and are not slowing down. 

If you have sensed a bit of bearishness throughout my blog entries so far, this hockey stick graph is one of the reasons. (I'm not always a pessimist, really)  Rising delinquency rates are one of the impediments to a healthy growing economy.

Monday, December 28, 2009

Oil and oil products inventory update. Refining margins and shipboard inventory

It has been a while since I posted regarding inventory levels of oil and oil products.  Here's an update:  Inventory levels have fallen from their highs earlier this year but are still elevated.  Refining margins still stink and a signficant number of tankers in the world are being used as seaborne storage playing the contango trade.

Like a lot of other commodities, oil prices are showing an expectation of further worldwide growth while inventory levels do not yet show such growth.  As the markets quite often attempt to predict the near term future, if this growth does not occur prices may correct to the downside rather quickly.  Of course the Iranian / Israeli situation my heat up and toss all economic factors out the window. 

Even with the recent drawdown in inventory they are still higher than last year at this time.   It is of course unknown if the recent dramatic decline will continue, but considering the cold weather in America it is very possible.

To quote business week:
A 26-mile-long line of idled oil tankers, enough to blockade the English Channel, may signal a 25 percent slump in freight rates next year.
Traders booked a record number of ships for storage this year, seeking to profit from longer-dated energy futures trading at a premium to contracts for immediate delivery . . .
The storage trade is profitable so long as the spread between energy contracts exceeds ship rental, insurance and financing costs. A year ago, the spread between the first and sixth Brent crude-oil contracts traded on the London-based ICE Futures Europe exchange was 23 percent. Now, it’s 4 percent. . . .

ht: The Big Picture blog

Monday, December 21, 2009

Something to be thankful for . . . An American's visit to North Korea

Considering America's current situation one's concern with their own economic position is higher up on the priority list of its citizens.  If you think its bad here be glad you don't live in North Korea  

Real information about North Korea is very tough to find so I was fascinated by the recent writings by Patrick Chovanec.   After reading the entries I want to go back and read 1984.  It is amazing how the government has such control over the information and culture of North Koreans.   Please read the entries for a perspective on a truely repressive regime.

Part 1
Part 2
Part 3
Part 4
Part 5
Part 6

Thursday, December 17, 2009

Looking for a man gift?

If you are looking for a Christmas gift for a guy, here's something to consider.  

Shake flashlights convert shaking energy into electrical energy by means of a high strength magnet passing back and forth through a coil of wire. The electrical energy generated is stored in a capacitor. The energy in the capacitor is then used to power a high brightness Light Emitting Diode (LED).

I have purchased a few of these over the years for myself and as gifts. They are VERY tough and worth the money.  There are lots of knockoffs so be careful where you purchase it.  Here's a link to the company where you can purchase them directly.

A shake light is not as bright as a battery powered flashlight but are great as a backup light source.  Since there are no batteries to wear out, putting one in a car or boat is great insurance. They are somewhat large so don't be surpised when it shows up in the mail.  They do make a smaller version but I wouldn't suggest it unless you are really tight on space, the light thrown out by the smaller version isn't worth the smaller size.

I rate it 4 'wrenches' out of 5.

Has the US dollar turned? It certainly looks so.

Several major currencies are weaker against the dollar.  The Australian dollar, Euro, and Loonie are all trading past their 20,50 and 100 day moving averages. The Yen is above the 20 and 50 and nudging up against the 100 day moving average.  The concern over Greece is hitting the markets and causing a world wide derisking.  Is this the end of current US Dollar weakness? I think so.   The currency markets seem to trade on technicals quite a bit (I'm not an expert in currencies by any stretch of the imagination.)  and punching through all those moving averages it a big nail in the coffin of US Dollar weakness.

We'll see in a few months if I'm right.

Some pretty graphs to show you whats going on.  The Euro fall is impressive.

Monday, December 7, 2009

Consumer credit, where art thou?

Consumer credit (consumer loans excluding home loans) was released today.  Consumer credit continues to contract further and faster.  Unlike my previous posting I have extended the graph back to the beginning of the data series so you can see the extent of the current decline in context.

Since World War II at worst consumer credit levelled off for a period of time before resuming its ascent.  Not this time.  While you may not be able to see it, the current rate of decline is getting worse each month and shows no sign of at least slowing down. 

Thursday, December 3, 2009

Bank lending continues cliff diving

Here's the update on total bank lending and it is not good.  Total loans and leases at US banks continue to drop and is picking up speed.

I went back and looked throughout the entire data set available (back to 1973) for bank loans and loan growth has never been this negative, ever.  

If you notice on the graph, bank lending levelled off and slowly resumed growing after each of the two previous recession.    So far bank lending continues to fall and shows no sign of even levelling off. 

The year over year deceleration in US government securities owned by banks is curious considering loans dropped as well.  Are banks deleveraging their balance sheets or is it just seasonal noise?

Until bank lending stabilizes and starts growing again we will not have any meaninful recovery.