by Calculated Risk on 5/25/2010 08:12:00 AM

From the NY Times: Concerns Over North Korea Shake Markets and Euro

From the WSJ: Europe's Banks Hit by Rising Loan Costs

On Monday, the London interbank offered rate, or Libor—the rate at which banks lend money to each other, and thus a vital sign of their mutual trust—rose to its highest level for the three-month dollar rate since last July. While the current Libor, at just above 0.5%, is far below the sky-high levels of 4.81875% reached at the height of the financial crisis in 2008, it is still a significant jump from 0.25% as recently as March.

But Libor's jump is more pronounced at European banks. On Monday, German state-controlled lender WestLB AG said it cost 0.565% to borrow dollars for three months, up from 0.38% a month earlier. U.S.

The three month Libor has moved even higher, and is now at 0.54.

The TED spread is up to 38.61 (from 34.47). This is the difference between the interbank rate for three month loans and the three month Treasury. The peak was 463 on Oct 10th -the spread is still low, but has been steadily rising.

The European markets are off sharply. The German DAX off 2.76%, the FTSE 100 off 2.5%.

From CNBC: Pre-Market Data shows the S&P 500 off about 25 or over 2.0%. Dow futures are off almost 200 points.

The Euro is down to 1.22 dollars.

by Calculated Risk on 5/24/2010 11:56:00 PM

The U.S. futures are off tonight:

From CNBC: Pre-Market Data shows the S&P 500 off about 19 or almost 2.0%. Dow futures are off about 150 points.

Get your Dow 10K hats ready ... I've heard the Libor is "going nutty" (no link).

CBOT mini-sized Dow

And the Asian markets are off about 2% ... and a graph of the Asian markets.

The Euro is back down to 1.23 dollars. Some other sources for exchange rates and NetDania.

And a couple of stories ...

From Micheal Pettis at Bloomberg: China Falls Victim to Greek Deficit Contagion

And from the Financial Times: Obama adviser calls for new ‘mini-stimulus’

The Obama administration made a strong plea to Congress on Monday to grit its teeth and pass a new set of spending measures ... in order to help dig the economy “out of a deep valley”. ... Lawrence Summers ... urged Congress to pass up to $200bn (£138.9bn) in spending measures ... last year’s $787bn stimulus is wearing off.
except with permission

Could be an interesting day ...

Best to all.

by Calculated Risk on 5/24/2010 09:05:00 PM

Note: On existing home sales, please see Inventory increases Year-over-Year and Existing Home Sales increase in April

The Department of Transportation (DOT) reported earlier today that vehicle miles driven in March were up from March 2009:

Travel on all roads and streets changed by +2.3% (5.8 billion vehicle miles) for March 2010 as compared with March 2009. Travel for the month is estimated to be 254.8 billion vehicle miles.

Cumulative Travel for 2010 changed by -0.7% (-4.8 billion vehicle miles).

So miles driven are still down for the year compared to 2009.

Also miles driven in March were still 1.7% below March 2007.

Click on graph for larger image in new window.

This graph shows the percent change from the same month of the previous year as reported by the DOT.

As the DOT noted, miles driven in March 2010 were up 2.3% compared to March 2009.

The YoY decline in February was blamed on the snow, and there might have been some extra driving in March once the weather improved. On a rolling 12 month basis, miles driven are still 2.1% below the peak - and only 0.5% above the recent low - suggesting a sluggish recovery.

by Calculated Risk on 5/24/2010 05:55:00 PM

“This is a market purely on life support, sustained by the federal government. Having FHA do this much volume is a sign of a very sick system.”
Federal Housing Commissioner David Stevens at Mortgage Bankers Association Government Housing Conference (see Bloomberg, the FHA was involved in more transactions in Q1 than Fannie and Freddie combined)

No kidding ...

by Calculated Risk on 5/24/2010 04:04:00 PM

Note: On existing home sales, please see Inventory increases Year-over-Year and Existing Home Sales increase in April

The market sell-off continues with the Dow down 127. The S&P 500 off 14 (1.3%).

Click on graph for larger image in new window.

This graph is from Doug Short of dshort.com (financial planner): "Four Bad Bears".

Note that the Great Depression crash is based on the DOW; the three others are for the S&P 500.

The Euro is down to 1.2383 dollars (off slightly).

The TED spread increased to 35.96 from 34.47. This is still fairly low, but has been increasing steadily. Note: This is the difference between the interbank rate for three month loans and the three month Treasury. The peak was 463 on Oct 10th and a normal spread is below 50 bps.

The three month dollar Libor edged up to 0.51.