Sunday, April 26, 2009

Weekend Round-up

There are lots of good stories out there, so without further delay....

1) Yahoo reported that GM's Employee stock fund dumped all of their GM stock. That's not exactly a ringing endorsement of the future for GM's equity. I don't think it's a signal of anything material about the future of GM, but it does seem to indicate that the manager of the fund does not believe that GM is among their best investments they can make right now.

2) Homebuilders are now not just putting fake furniture in houses to avoid the empty look, now they are filling the homes with fake residents.

"This $1.2 million seaside pied-a-terre is occupied by Johnna Clavin, a 45-year-old Los Angeles event planner and decorator who has seen business slow. In exchange for giving the townhouse a stylishly lived-in look, she gets to stay there at a steep discount and stands to earn a bonus if the house sells fast.

Home "staging" companies charge owners several thousand dollars to fill houses with attractive furniture -- but no human props. Faux homeowners could be the next big thing in staging. They supply "that little extra mint on the pillow," says Steve Rodgers, president of Windermere Exclusive Properties in San Diego, which has the listing on Windward Way. "

Ms. Clavin responded to a Craigslist ad placed by Quality First Home Marketing, a San Diego startup. It aims to fill high-end empty houses with occupants who play the part of happy homeowners, in a bid to remove the price-depressing stigma of vacancy.

If the place sells in 90 days, she'll earn a relocation bonus, and move on to another empty asset.

Ms. Clavin, and her furniture, beat out 46 applicants who auditioned for the homeowner role, says Quality First's owner, Mary Heineke. "I already know they can't afford the house," Ms. Heineke says. "I want to know if they can replicate a person who can afford that house."
Showhomes Management LLC, a franchise operation based in Nashville, has 350 "resident managers" living in homes for sale in 46 high-end markets."

3) We finally got word on the not so stressful "stress test" on Friday. As expected, most of the banks will pass this test because the government's expectations for baseline and "worst case" scenarios are so tame.

"Real GDP’s average baseline is -2% for 2009 and +2.1% for 2010. The alternative more adverse levels are -3.3% for 2009 and +0.5% for 2010.

The average baseline for unemployment rates is 8.4% in 2009 and 8.8% for 2010. The alternative more adverse levels were 8.9% in 2009 and 10.3% in 2010. " I think unemployment, commercial real estate losses and further bank weakness makes all of these estimates useless. But, it keeps the people happy for another day....

4) Outside of the markets - The swine flu is the story of the day. I don't think this has a meaningful economic impact, but be aware that the impact of rumors in foreign markets. The SARS epidemic killed fewer than 1,000 people, but put a serious crimp in the global economy. I'm looking to book a week at the Ritz Carlton Cancun - buy when no one else is buying, sell when everyone is buying :)


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