Thursday, March 6, 2008

I'm Hungry

I wanted to talk a little bit about raging food commodities after watching a documentary on the starving North Koreans last night. My wife and I were horrified to watch the state of malnutrition in that country. A striking fact was the average 7 year old in North Korea is 8" shorter than their South Korean brothers. This is a country that can afford to feed its people, it just chooses not to.

The relevance to today was brought forth in another interesting article by Jon Markman. Are we going to run out of food whether we can afford it or not is the new question. "Wheat futures prices have tripled since 2004, corn prices have almost tripled since 2005, and soybeans have tripled since 2006." Furthermore, rice has not only soared in price, but we are at a 25 year low in terms of reserves. Aside from how this may induce investment strategies going forward in companies that have soared in the last year such as Monsanto and Potash, do we have to worry if China and India continue to grow at alarming rates that we have enough food in the world? Or, are we back to natural selection? Even with all of our synthetic growing technology, a famine might ensue, bringing population levels back to sustainable rates.

Back to the market, Ambac has been both the source of 150 loss reduction and 170 point gain reducer the past 2 days. I'm becoming a little nauseous even as I write because, who cares about this stinking company already!! They're broke. That's why no private investor infused cash and they were forced to raise an additional $1.5 billion on their own (less than the $2 billion the ratings agencies wanted) and diluting their already obliterated shares an additional 19%.

UBS has a $400 billion dollar exposure to substandard credit. That's a lot. Their writedowns may now grow to $25 billion, of course that figure was just $15 billion last week, so who knows?

Thornburg Mortgage failed to make a $30 million payment, triggering further payment penalties. Look dudes, if you can't come up with $30 mill these days, you're in bad shape.

Woohoo! 12 of 18 retailers beat sales projections last month, the catch being that most beat horribly negative expectations with just plain bad negative results. Yeah, let's get excited about that.

Foreclosures hit an all-time high last month. As I've mentioned before, we still have another 5 months until we hit the largest ARM reset months. This is only going to get worse. Pending home sales stayed the same, a positive sign according to the economist for the National Association of Realtors. This is the same guy who said that home sales would pick up at the beginning of this year, then the 2nd half of this year....Anyone who listens to this guy's projections must have a large hole in their head.

Jobs out tomorrow, ADP says 20,000 losses in Feb. vs. a projected 35,000 gain.

Bomb in Times Square this morning, great.

In another example of how the Fed's cuts aren't helping people who have resetting ARMS, Laurie Kulikowski of TheStreet.com reports, "Applications aren't getting funded because the borrowers aren't meeting the underwriting criteria," says Tom LaMalfa, a managing director of Wholesale Access, a residential lending market research firm. "We're guessing only six out of 10 borrowers who apply [for a loan] get refinanced." Can't refi without credit, don't have good credit if you had an ARM in the first place. Mortgage rates continue to trend up in this horrible credit environment.

P.S. This should be my last template change for awhile. Finally found one that fits my title, is legible, and that I can make easy additions to.

3 comments:

Tiger Coach said...

A builder here is STUCK with a 60 acre dairy farm. Evidently the developer thought they could re-zone the property from $400,000 3/4 acre parcels to condos! The city would not change zoning and...well you know the rest! Maybe they should consider a trip to the local John Deere dealer... Right now they have NOTHING but a none performing asset!

If I got this right...did Max get married? How's Noah?

boom and doom said...

Tiger coach, I did not realize that project fell through. I've been focusing so much on the national and world economy, I missed something in my own backyard. You will have to fill me in tonight.

AX said...

Welcome Boom and Doom, take it you're not a bull. TC, Max is getting hitched in a few months, plenty of time to oscillate on the over/under. Fam's good.