by Calculated Risk on 2/04/2010 10:03:00 AM

From the Financial Times: Sovereign debt fears rattle investors

“The latest catalyst was [Wednesday’s] bond auction in Portugal which was scaled back and which has re-ignited fears that the likes of Portugal and Greece will not be able to fund their deficits without a bail out,” said Gavan Nolan, credit analyst at Markit.
excerpted with permission

From Bloomberg: Portugal, Spain Lead Worldwide Decline in Stocks; Dollar Gains

Stocks and bonds fell in Spain, Portugal and eastern Europe on concern governments will struggle to fund their budget deficits as spending cuts in Greece trigger labor strikes. ... “The focus is shifting toward Spain and Portugal, where the deficit-reduction plans have been far less ambitious than Greece,” said Kornelius Purps, a fixed-income strategist in Munich at UniCredit Markets & Investment Banking.

And from the WSJ: Greece, Portugal Woes Intensify

by Calculated Risk on 2/04/2010 08:30:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending Jan. 30, the advance figure for seasonally adjusted initial claims was 480,000, an increase of 8,000 from the previous week's revised figure of 472,000. The 4-week moving average was 468,750, an increase of 11,750 from the previous week's revised average of 457,000.
...
The advance number for seasonally adjusted insured unemployment during the week ending Jan. 23 was 4,602,000, an increase of 2,000 from the preceding week's revised level of 4,600,000.

Click on graph for larger image in new window.

This graph shows the 4-week moving average of weekly claims since 1971.

The four-week average of weekly unemployment claims increased this week by 11,750 to 468,750.

This is the third weekly increase in a row for the four week average, and the average is now 28,000 above the low in early January. Both the level of claims, and the recent increase in the 4-week average, are concerning and suggest continued job losses.

by Calculated Risk on 2/04/2010 12:23:00 AM

Jon Stewart on Toyota (link here):

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Toyotathon of Death
www.thedailyshow.com
Daily Show Full Episodes Political Humor Health Care Crisis

by Calculated Risk on 2/03/2010 08:47:00 PM

Reuters is quoting President Obama:

"One of the challenges that we've got to address internationally is currency rates and how they match up to make sure that our goods are not artificially inflated in price and their goods are artificially deflated in price. That puts us at a huge competitive disadvantage."

Pimco's Paul McCulley listed this as one of the key issues for 2010:

The first issue is the peg between the Chinese yuan and the U.S. dollar, which essentially gives us a one-size-fits-all monetary policy in a very differentiated world. ...

And Professor Krugman wrote about this on Dec 31, 2009: Chinese New Year

China has become a major financial and trade power. But it doesn’t act like other big economies. Instead, it follows a mercantilist policy, keeping its trade surplus artificially high. And in today’s depressed world, that policy is, to put it bluntly, predatory.
...
My back-of-the-envelope calculations suggest that for the next couple of years Chinese mercantilism may end up reducing U.S. employment by around 1.4 million jobs.

And Larry Summers mentioned this at Davos, see Gideon Rachman's piece in the Financial Times: How the bottom fell out of 'old' Davos

Larry Summers ... pointed out that Paul Samuelson, a famous economist (and uncle of Mr Summers), had argued that the case for free trade might not apply when countries were trading with nations that were pursuing mercantilist policies. The reference to China did not need to be spelled out.
excerpted with permission

Getting the Chinese to revalue (or float) their currency is probably critical to the U.S. achieving Obama's ambitious SOTU goal of doubling U.S. exports in the next five years.

by Calculated Risk on 2/03/2010 05:56:00 PM

From Jon Prior at HousingWire: Mortgage Delinquencies Pass 10%: LPS

Home-loan delinquency rates in the US reached 10% in December, up from the record-high 9.97% in November, according to Lender Processing Services ... which provides data on mortgage performance.

Accounting for foreclosures in the pipeline, the total non-current rate stands at 13.3% .... When extrapolated for the entire mortgage industry, 7.2m mortgage loans are behind on their payments.

More foreclosures and short sales coming!

Note: the MBA reported the delinquency rate in Q3 was 9.64%; the MBA Q4 delinquency data will be released soon.