Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Fri 10.26.2007
Gold Climbs to Highest Since 1980 on Record Oil, Weak Dollar Gold rose to a 27-year high in London as the dollar slumped to a record low against the euro and oil traded at an all-time high, boosting bullion's appeal as a hedge. Gold has had a correlation of 0.8 against the euro-dollar exchange rate in the past month. A figure of 1 would indicate the two moved in lockstep. Some investors view dollar-denominated gold as a hedge against further declines in the currency and inflation when energy prices surge. ``You can't be anything but bullish on gold,'' James Moore, an analyst with London-based TheBullionDesk.com, said in an interview today. ``The dollar isn't doing particularly well, oil prices are firm and there's political tension with Iran.''
Crude rallies past $92 to new record Crude-oil futures rallied to a new record high on Friday, with worries about U.S. inventories and tensions in the Middle East combining to send the benchmark energy contract past $92 a barrel. Crude oil for December delivery rose $1.35 at $91.81 a barrel on the New York Mercantile Exchange. Earlier Friday, the contract rose to a new record high of $92.22 a barrel in electronic trading, a day after the U.S. slapped new economic sanctions on Iran. The gains were also driven by worries about potential conflict between Turkey and the Kurds in the north of Iraq. "Continued concerns of insufficient supplies for the northern hemisphere's winter heating season combined with signals from OPEC that it is unlikely to boost supply further has underpinned oil," said analysts at Action Economics.
Dollar Falls to Record Low Versus Euro as Bets on Fed Cut Mount The dollar fell to a record low against the euro as oil rose above $92 a barrel and speculation that U.S. consumer confidence is waning bolstered the case for the Federal Reserve to cut interest rates. The U.S. currency headed for a third weekly decline versus the euro as an unexpected drop in U.S. durable goods orders yesterday combined with rising speculation about corporate losses linked to the housing slump. American International Group Inc. fell the most in 12 weeks in New York on concern it will write down assets linked to the subprime-mortgage market collapse. ``The dollar is suffering from fading yield support at a time when the market thinks the Fed will have to cut rates again,'' said Kamal Sharma, a currency strategist at Bank of America Corp. in London. ``The bias is for continued dollar weakness,'' which may trade between $1.42 and $1.45 for the rest of the year, Sharma said.
Henry Paulson presses for aid to sub-prime lenders Henry Paulson, the US Treasury Secretary, is seeking to persuade the White House to offer financial compensation to American mortgage lenders that try to help troubled homeowners by renegotiating the terms of their loans. The Times has learnt that Mr Paulson is lobbying President Bush to provide funds so that mortgage lenders can reduce the loss that they would incur from either reducing the rate of an adjustable home loan or extending the life of the mortgage to make it cheaper for the property owner. It is understood that Mr Paulson’s proposals are meeting significant resistance within Washington, where it is perceived that such a move would be a bank bail-out scheme.
AIG may take $9.8 bln subprime hit, analyst says American International Group could take a $9.8 billion hit from its exposure to subprime mortgages, Friedman, Billings, Ramsey analyst Bijan Moazami estimated on Thursday. The write-downs will be big, but manageable for one of the world's largest insurers with $104 billion in shareholders equity and the ability to generate third-quarter earnings of $4.4 billion, the analyst wrote in a note to clients. AIG has the largest subprime exposure of any insurers he covers, Moazami noted. Shares of the company fell 3.2% to $61.79 on Thursday amid speculation it could be hit by big write-downs. Spokesman Chris Winans said the company doesn't comment on market rumors. "Considering the recent write-downs at Merrill Lynch, we believe it is appropriate to evaluate the potential charges that AIG could be facing in light of the continued meltdown in subprime," the analyst wrote.
Another “Realistic” View of the Housing Market Below is another, what I consider, realistic view of the housing market. Being an optimist or a pessimist about the housing market is not the issue. The issue about the housing market is to be a realist. Thank goodness the financial press is beginning to state where we are at. My dad used to tell me, "you can't get to some place unless you know where you are at". Text in bold is my emphasis. The housing market is just getting worse. Home resales tumbled 8% in September to the lowest levels in this decade, prompting the obvious question: When will it all end? The honest answer is no one knows. Optimists have been saying for more than a year that the worst is behind us, while the pessimists have been saying recovery is still a year, or years, away.
Subprime-Mortgage Defaults Rose Last Month, ABX Data Suggests Late payments and defaults among subprime mortgages packaged into bonds rose last month as higher loan rates and weaker home prices pushed homeowners to the brink, according to data for loans underlying ABX derivative indexes. After September mortgage payments, 21.3 percent of the loan balances from 20 deals created in the first half of 2006 were at least 60 days late, in foreclosure, subject to borrower bankruptcy or already turned into seized property, up from 19.7 percent a month earlier, according to a report yesterday from UBS AG. Prepayments on mortgages also slowed, suggesting it's more difficult for borrowers to sell their homes or refinance out of adjustable-rate loans amid a ``shutdown'' of the subprime market, the New York-based UBS analysts led by Thomas Zimmerman wrote.
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