Jamie Dimon’s got balls

Sometimes the Best Defense is a Good Offense: JPMorgan Edition

JPMorgan is suing (Alt) the Federal Deposit Insurance Corp for failing to honor obligations as receiver for Washington Mutual.  JPM is claiming that the $2.75bn receivership assets held by the FDIC for Washington Mutual should be “sufficient” to cover everything from oh, you know, settlements with US agencies, lawsuits from Deutsche Bank and “injuries sustained by a woman who slipped on a ceramic tile outside a Washington Mutual branch”…Ok.

The Obama Portfolio and Active Management Seem Pretty Good

On Oct. 11, 2012, a team of analysts at UBS created two model stock portfolios: one Obama portfolio (14 stocks tilted towards alternative energy, healthcare, insurance, ammunition manufacturers etc.) and one Romney portfolio (28 stocks tilted towards financials, military and defense contractors, mining, tobacco etc.).  Interestingly enough, the Obama portfolio has outperformed the market thus far by 31.6% and the Romney portfolio by 25.6%.  Also, while Democrats have been in the oval office, the market has gained 7.1% compared to 3% under Republicans since 1900.  Put that in your Reaganomics and smoke it.  Meanwhile, as institutional investors throw more money (Alt) behind their favorite active managers despite lackluster returns and a roaring equities market, retail investors are getting the same advice from Yahoo!  It seems as if being at the top of a bull market makes the stock-picking game more difficult and therefore more attractive as a management style.

Housing Starts Surge, Mortgage Activity Drops, Spain Pulls a Beyonce

Housing starts jumped 22.7% in November, the biggest increase in over 20 years and a six-year high annualized rate.  Single-family homes increased 20.8% while multi-family homes surged 26.8%.  Housing inventory remains at a 4-½ year low.  Meanwhile, the Mortgage Bankers’ Association is reporting its mortgage application activity index dropped 5.5%.  The index has fallen six of the past seven weeks.  So, if mortgage application activity is dropping and housing construction is surging, then either the mortgage activity index is heavily overweight refinancing, or people are buying homes with cash?  Also, new mortgages may get more expensive next year due to new regulation for Fannie Mae and Freddie Mac.  The agencies are going to start charging higher fees and requiring larger down payments on loans.  Some are worried about how this coincides with anticipated increases in rates from the Fed and say the magnitude of the regulation is surprising: “It’s like Beyonce’s album: It all of a sudden hit the market.”  Meanwhile, mortgage defaults in Spain are also pulling a Beyonce: “more than 5 percent of Spanish residential mortgages were in default in the third quarter, up from 3.5 percent a year earlier, according to data released today by the Bank of Spain.”  While defaults as a proportion of all loans by Spanish lenders is at a record high 13%, they are also rising “partly because of changes required by the Bank of Spain that force lenders to book more soured mortgages.”

USA: Mortgage Bonds Reflect Diverging Fortunes of US Malls (Alt)

Here’s a really interesting article from the Financial Times highlighting the wide gap between two types of malls: the zombie-apocalypse type and the Fifth Avenue type.  As commercial mortgage-backed securities are surging to their highest levels since 2007, CMBS deals attached to the zombie-apocalypse malls are averaging about 90% losses for this year according to Moody’s.

USA: A Look Inside the Fed’s Balance Sheet

Live Fed Links: WSJ Blog, UStream Bernanke Press Conference


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