by Calculated Risk on 4/20/2009 11:25:00 AM

From the LA Times: Southern California office market is hammered by recession

Vacancy in Los Angeles County reached 14.3% in the first quarter, up from 11.2% a year earlier, according to a report released last week by Cushman & Wakefield. In Orange County, where demand has been dwindling for more than a year, vacancy ticked up to nearly 18% from 15%.

Among the hardest-hit markets are the Inland Empire, Irvine and north Los Angeles County, all of which have been wracked by the losses of tenants in the troubled industries of mortgage and finance. Vacancies in all three areas have surpassed 20%, a sign of a very weak market. In Ontario and the area around Los Angeles International Airport, vacancy tops 30%.

And the following is ... amusing:

In West Los Angeles, owners are steeply discounting the monthly cost of an office -- cutting rates that, ironically, grew so high during the boom years that many companies were forced to move out and find cheaper digs.

I saw this in my community too. Leases expired. Landlords raised the rents sharply. The long term tenants moved out. Real estate related businesses moved in. And now the buildings are vacant!

by Calculated Risk on 4/20/2009 10:35:00 AM

BofA CEO Ken Lewis on conference call:

[L]et me make a couple comments about our given environment. Credit is bad and we believe credit is going to get worse before it will eventually stabilize and improve. Whether that turn is later this year or in the first half of 2010, I'm not going to hazard a guess ... For the rest of the year we look for charge-offs to continue to trend upward. I think it will be at a slower pace than we've experienced. Reserve build will also continue for the next couple quarters though not at the level we experienced this quarter. From an economic standpoint we believe we can see weak but positive GDP growth by the fourth quarter this year. I have to say that even our internal economists are a little at odds as to the timing, with some seeing recovery earlier. However, we think it prudent to run the company under an expectation it will be later in the year or early next year. We believe unemployment levels won't peak until next year at somewhere in the high single digits. At this point we don't see unemployment meeting or exceeding 10% but that will of course be impact by how long the economy stays in recession.
emphasis added

by Calculated Risk on 4/20/2009 08:55:00 AM

From CNBC: BofA Tops Forecasts with Help from Merrill

While results topped analysts' forecasts, they were bolstered by one-time events, including a $1.9 billion gain from selling shares of China Construction Bank and $2.2 billion of gains tied to widening credit spreads.
...
Bank of America set aside $13.38 billion for credit losses in the quarter, up from the fourth quarter's $8.54 billion.
...
Credit quality deteriorated broadly as the economy weakened, housing prices fell and unemployment rose.

Net charge-offs rose to $6.94 billion from $2.72 billion a year earlier. Nonperforming assets more than tripled to $25.74 billion, and rose $7.51 from year-end.

Bank of America's credit card business lost $1.77 billion in the quarter.

"We continue to face extremely difficult challenges, primarily from deteriorating credit quality driven by weakness in the economy and growing unemployment," Lewis said.

The confessional is still open.

by Calculated Risk on 4/20/2009 01:38:00 AM

I had a great time at the NPR event.

Here is an open thread for discussion. The futures are off slightly ...

Bloomberg Futures.

CBOT mini-sized Dow

CME Globex Flash Quotes

Futures from barchart.com

And the Asian markets. The Asian markets are mixed, but mostly up.

And a graph of the Asian markets.

Best to all.

by Calculated Risk on 4/19/2009 08:30:00 PM

The Planet Money webcast starts at 6PM PT with This American Life’s Alex Blumberg and NPR’s Adam Davidson. (I'm just in the audience)

Here is the site.

Best to all