Monday, August 16, 2010

Monday Morning update

The markets tried to bounce a bit after the release of the Empire Manufacturing survey that showed some improvement over July but seems to be short of expectations.

However, I think that people have read through the details and seen the most important quote

"The new orders index fell below zero for the first time in over a year, dropping 13 points to -2.7—an indication that, on balance, manufacturers saw orders decline slightly."

The decline in new orders was pretty sharp and probably caught most economists off guard.

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Today's best data tidbit comes from The Big Picture

"During the session, Norris-who is considered to be a top authority on the Southern California real estate market-shared some intriguing insights. He believes the region is in an artificial market and is concerned about the shadow inventory that could flood the market, forcing prices even lower. However, this isn’t the shadow inventory of bank-owned homes you may have heard about; he refers to all the houses that may yet go into foreclosure. The problem will vary by region, but referring to Riverside County in Southern California, Norris presented some pretty alarming statistics:

• 23% of prime borrowers are not making payments
• 47% of non-prime borrowers are not making payments
• 90% of properties are upside down on value-to-loan (60% owe more than150% of value)

Many borrowers haven’t made a payment in more than two years and have yet to receive a Notice of Default."

1/4th of prime borrowers and 1/2 of subprime borrowers aren't paying? Nothing to see hear, move along....

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