Case to my previous post point: Jobless claims up; cooler CPI

Jobless claims up; cooler CPI gives Fed more room

WASHINGTON (Reuters) – New claims for state jobless benefits rose for the fifth time in six weeks and consumer prices fell in May, opening the door wider for the U.S. Federal Reserve to help an economy that shows signs of weakening.

Though the increase was small, it undermined hopes that a recent slowdown in hiring would prove temporary.

“There is very little sign of life,” said Hugh Johnson, chief investment officer of Hugh Johnson Advisors in Albany, New York. “The economy as measured by employment conditions has slowed and there doesn’t appear to be any change when you look at the claims numbers.”

You can read the full text here:

Jobless claims up; cooler CPI gives Fed more room



International super-rich target California real estate

And so they come.  Nothing new we didn’t already know but some interesting analysis by Reuters.

As uncertainty stifles global financial markets, real estate with strong rental prospects in key cities across the United States is again becoming an asset of choice for the yield-hungry international investor.

I do take issue with their unsupported statement

As the U.S. jobs market expands, there are signs that the worst may be over for the property market that spawned the sub-prime mortgage maelstrom and the world’s deepest banking crisis since the Great Depression.

even the mass media has been reporting about all the revisions to the unemployment rate and job creation numbers & how companies large and small are hesitant to add new jobs until they see more positive signs in the economy.  A pretty glib generalization that really doesn’t belong in the story.

You can read the entire story here.

While Chinese investment is no surprise I didn’t realize Canadians had more money flowing into US Real Estate.  Very interesting.  One key to note for Real Estate Investors, namely wholesalers/rehabbers/flippers looking for those bargain REO’s is the statement

 “From an investment standpoint, the view is even more positive: people are searching for returns which aren’t available with other investments, and real estate yields are now looking very attractive, given recent price adjustments.”

They are looking at different criteria when evaluating an investment property so don’t be surprised when all the REO’s are being bid up so high.  It’s a combination of the banks trickling out the inventory or opting for Short Sales to save some of the cost/time of foreclosure and the large investment funds just looking at yields that fit their investment goals.

JPMorgan Trades Lop Off $27 Billion, Wall St. says so what…

Since JP Morgan lost $2B in derivatives last month the resulting slide in their stock value has erased a mere $27B off their books.  So, have they learned their lesson yet?  It’s obvious they have not.  This type of trade wasn’t supposed to be happening any more period, but it did & they got caught and burnt.  Wonder what would have happened if no one noticed…wonder how many others may be sliding under the radar…  There can not be any more bailouts, no more “too big to fail” time to let the bad apples rot and the good apples flourish.  Regulation is a farce.  If any exists applicable to such risky behavior it lacks any teeth hence is unenforceable, a mere bunch of words, no beef.  Pathetic.

Here’s the wisest comment in the story:

Executives who say the loss is small for a firm that earned $19 billion last year are missing the warning it represents about unwieldy large lenders, said Richard Sylla, a financial historian at New York University’s Stern School of Business.

“Even a great banker like James Dimon can’t really manage such a huge operation,” Sylla said. “They convince themselves that everything is fine because they’re making money.”

U.S. Comptroller of the Currency Thomas J. Curry told the Senate Banking Committee last week that the loss raises “questions about the adequacy and rigor” of the bank’s risk management. Treasury Secretary Timothy F. Geithner last month called it a “pretty significant risk-management failure.”

Basically we can safely assume nothings changed on Wall Street.   Business as usual.

Here’s the article from Bloomberg.

JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon plans to testify before Congress this week about his firm’s $2 billion trading loss. His Wall Street colleagues don’t understand why.

“Occasional losses are inevitable,” said Blackstone Group LP (BX)’s Stephen A. Schwarzman, 65, CEO of the largest private- equity firm. “Publicly excoriating JPMorgan serves no purpose except to reduce people’s confidence in the financial system.”

JP Morgan Chase Chairman Jamie Dimon. Photographer: Spencer Platt/Getty Images

The loss sliced $27 billion from JPMorgan’s market value in the month after the May 10 disclosure, while triggering at least five federal probes and two planned Capitol Hill hearings with Dimon. It also renewed debate about whether curbs on trading by bankers were tightened enough after their wrong-way bets pushed the system to the brink of collapse in 2008.

Executives, lobbyists and analysts said in more than a dozen interviews that the public stir is an overreaction to a minor misstep.

“I kind of shrug,” said Bill Archer, 58, a former co- chairman of Goldman Sachs Group Inc. (GS)’s capital markets committee and now a partner at buyout firm Veronis Suhler Stevenson LLC in New York. “That’s just the way the world is.”

JPMorgan shares dropped 17 percent through last week after the New York-based bank, the largest in the U.S., disclosed the losses on credit derivatives held by its chief investment office. Dimon, 56, had shifted the unit from a conservative manager of unused cash into a profit center that bet on riskier assets, former employees have said. Some wagers became so large that they were driving prices in the $10 trillion market and couldn’t easily be unwound, Bloomberg News reported.

Follow the link in the title for the full story.

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