by Calculated Risk on 6/15/2009 07:48:00 PM

From the WSJ: Banks Challenge N.Y. Insurance Regulator Over MBIA Split

A group of large banks stepped up their fight against MBIA Inc.'s decision to split its businesses, filing a petition claiming the New York State Insurance Department had no right to approve the move.

The banks contend the move benefited some policyholders at the expense of others.

The 18 financial institutions, which include Barclays PLC., Bank of America Corp. and J.P. Morgan Chase & Co ...

The New York State Insurance Department earlier approved MBIA's restructuring plan to split its municipal-bond insurance business from its mortgage-backed securities insurance business. Many banks and hedge funds bought MBIA insurance on their structured product portfolios, and they are concerned about the financial strength of the MBS insurance business (and whether they will be paid or suffer further losses).

by Calculated Risk on 6/15/2009 06:38:00 PM

"Green Shoots" by Slick Dog's twenty month old daughter Piglet. Click on painting for larger image in new window.

by Calculated Risk on 6/15/2009 05:16:00 PM

Note: this is not seasonally adjusted. There is a very distinct seasonal pattern for imports, but not for exports.

Sometimes port traffic gives us an early hint of changes in the trade deficit. The following graph shows the loaded inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container). Although containers tell us nothing about value, container traffic does give us an idea of the volume of goods being exported and imported.

Click on graph for larger image in new window.

Inbound traffic was 19.7% below May 2008.

Outbound traffic was 15.3% below May 2008.

There has been some recovery in exports over the last few months (the year-over-year comparison was off 30% from December through February). But this is the 3nd worst YoY comparison for imports - only February and April were worse. So imports from Asia appear especially weak.

This suggests a little more improvement in the trade balance with Asia in the May trade report. Of course the overall trade deficit will probably be worse because of rising oil prices.

by Calculated Risk on 6/15/2009 03:52:00 PM

From CNBC: Credit Card Default Rate Hits Record High

U.S. credit card defaults rose to record highs in May, with a steep deterioration of Bank of America's lending portfolio ...

Bank of America—the largest U.S. bank—said its default rate, those loans the company does not expect to be paid back, soared to 12.50 percent in May from 10.47 percent in April.

In addition, American Express ... said its default rate rose to 10.4 percent from 9.90 ...

Capital One said its credit card default rate rose to 9.41 percent from 8.56 percent, while Discover said its charge-off rate increased to 8.91 percent from 8.26 percent.

JPMorgan Chase ... said its default rate rose to 8.36 percent in May from 8.07 percent in April

For the stress tests, the indicative two year loss rate for the more adverse scenario was 18% to 20% for credit cards (around 9% per year). That test might have been too lenient.

by Calculated Risk on 6/15/2009 01:00:00 PM

Click on graph for larger image in new window.

This graph shows the builder confidence index from the National Association of Home Builders (NAHB).

The housing market index (HMI) decreased to 15 in June from 16 in May. The record low was 8 set in January.

Note: any number under 50 indicates that more builders view sales conditions as poor than good.

Press release from the NAHB (added): Builder Caution Reflects Fragile Housing Market In June

Indicating that single-family home builders remain cautious and concerned about the fragile state of today’s economy and housing market, the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) declined one point to 15 in June.
...
“As expected, the housing market continues to bump along trying to find a bottom,” said NAHB Chief Economist David Crowe. “Meanwhile, builders are taking their cue from consumers, who remain uncertain about the economy and their own situation. Builders are also finding it difficult to complete a sale because customers cannot sell their existing homes.”
...
Two out of three of the HMI’s component indexes were unchanged in June, including the index gauging current home sales, which held at 14, and the index gauging traffic of prospective buyers, which held at 13. Meanwhile, the index gauging expectations for the next six months declined a single point, to 26.

Regionally, the decline was entirely focused in the South, which is the nation’s largest housing market. There, the HMI declined 3 points to 15, while the rest of the regions posted gains. The Northeast had a one-point gain to 20, the Midwest, a one-point gain to 15, and the West, a two-point gain to 14.