Printed from StreetEasy.com at 12:03 PM, Apr 16 2014
http://streeteasy.com/talk/discussion/32568-qe3-and-manhattan-re?last_page=true
Talk » Market » Discussing 'QE3 and Manhattan RE'

QE3 and Manhattan RE
SAVE    RSS

<< first    < prev       386 comments  -   page of 4        next >    
Comment removed.

no fb page - translation, couldnt post a pic that wouldn't break mirrors or wouldn't make wolves howl. no twitter - translation, actually tracks followers and other than your pyschiatrist and yourself, nobody left who would dare follow. again, BORING! Back to football.....

Ignored comment. Unhide
Comment removed.

truth, i take that back. you havent managed to avoid social media all together. i do think there is a posting of you on one of those early cave painitings in france.

Comment removed.

Still waiting for Brooksie to point out all of that excessive regulation he was discussing.

One regulation would be a good start.

Comment removed.

consistently very bizarro. wolves still howling at the prospect of ur fb pic.....and thank gawd most of the og's are back in the house. the loons almost took over the place.

Comment removed.

heeerrreee we go again, out comes the victim card. so predictable, so boring, so hmmmmmm - crazy. the next post will be, gotta go off to the debutante ball. much too good for this stuff. what a maroon.

Ignored comment. Unhide
Ignored comment. Unhide
Comment removed.
Ignored comment. Unhide
Ignored comment. Unhide
Ignored comment. Unhide
Ignored comment. Unhide
Ignored comment. Unhide
Comment removed.
Ignored comment. Unhide
Comment removed.
Ignored comment. Unhide
Ignored comment. Unhide
Ignored comment. Unhide
Ignored comment. Unhide
Ignored comment. Unhide
Comment removed.
Comment removed.
Ignored comment. Unhide
Comment removed.
Comment removed.
Ignored comment. Unhide
Ignored comment. Unhide
Ignored comment. Unhide
Ignored comment. Unhide
Ignored comment. Unhide

No use hating, Brooksie! Just post us one of those regulations that you find oppressive and excessive.

We're still waiting.

Comment removed.
Ignored comment. Unhide
Comment removed.
Ignored comment. Unhide
Comment removed.
Ignored comment. Unhide
Comment removed.
Ignored comment. Unhide
Ignored comment. Unhide
Comment removed.
Ignored comment. Unhide

Foiled again, Brooksie!

http://dealbook.nytimes.com/2012/10/11/boom-in-mortgages-is-expected-to-benefit-banks-profits/?hpw

See in particular this paragraph:

"It comes down to the advantageous role banks play as the middlemen in the mortgage machine. Instead of holding on to new mortgages that earn interest over a number of years, BANKS SELL NEARLY ALL OF THEM TO INVESTORS AFTER PACKAGING THEM INTO BONDS. The federal government, through entities like Fannie Mae, attaches a guarantee of repayment on the loans, making the bonds even more attractive to the investors."

How do you like that?!

Ignored comment. Unhide
Ignored comment. Unhide
Ignored comment. Unhide
Ignored comment. Unhide
Ignored comment. Unhide

Brooksie, Brooksie, Brooksie! Originating a mortgage is not the same thing as keeping it on its books. You should know that by now, because I've been trying to teach it to you for weeks.

And I already previously posted banks' holdings of MBS earlier in the thread, which data I got from the Fed. And as I said there the holdings are immaterial to their total assets (about 1/15 of total assets) and they are held FOR SALE to manage bond portfolios, not as investments.

You can have your coffee anyway you want, but you're posting data that I already posted. Banks DO NOT KEEP THE BULK OF THE MORTGAGES THEY MAKE (which is what "originate" means, FYI) on their books, which is what you falsely claimed. Rather, they securitize them. They then MAY purchase MBS on the open market, but those are NOT the mortgages that they originate (necessarily), and they are not held as INVESTMENTS but rather for trading to manage a bond portfolio.

You'd be much better off admitting that you don't know what you're talking about than posting things that I've already posted, and pretending that they support what you said. If ignorance is bliss, you are surely very happy indeed!

Best regards,

Stevie.

Comment removed.
Ignored comment. Unhide
Ignored comment. Unhide

No, Brooksie, read again - that is precisely what I have been saying all along, and it's all in the thread, including the Fed's numbers.

I've been trying to teach you these things, but I haven't been having much luck.

And laugh at me as you will for what I do as continuing education, but it is a semi-requirement of my trade so I pick the education that gives me a certificate, always from a Top University.

It's called marketing.

Ignored comment. Unhide
Comment removed.

I absolutely said that and I absolutely meant it, and I haven't changed my mind. Had I known that you would harp on it & try to misinterpret it I might have said "massive amounts," and said, "as investments," but then of course I have no way of knowing what you'll misinterpret next.

So - rather than take my explanation out of context, here is what I wrote:

"The vast amount of bank lending (mortgages, credit cards, car loans) no longer sits on banks' balance sheets, but rather is sold as ABS's to third parties."

And here was your answer: "FALSE"

You're WRONG, CASE CLOSED.

Unless you are going to try learn me something, yet again.

Ignored comment. Unhide
Ignored comment. Unhide
Ignored comment. Unhide

The fed buying MBS just makes it easier for origninators to get loans off thier books to securitizers. The fed is buying up a lot of MBS which makes less paper available to other natural buyers. If rates stay low its not more profitable. Ultimately we need loan demand and for banks to be willing to make mortgages to get the whole cycle going again.

Ignored comment. Unhide

Hmm. Where to start? First, let's see: publishing an article from Wordpress. A blogger. Very nice, very nice indeed. Brooksie, why not write something yourself on Wordpress and reference it as "authority"?

Then let's see: "The MBS holdings of large commercial banks are up 32% since the end of 2009—that’s the red line in the chart below. That’s outpaced the growth in other bank investments, especially that saw-toothed blue line at the bottom, which are real estate loans."

Here is a more reliable source:

http://www.federalreserve.gov/releases/h8/current/

And you will see very clearly that the Fed DOES NOT BREAK OUT MBS's from Treasuries, so YOU CANNOT TELL from the information you have provided what the breakdown is of those holdings. And the chart itself says the same thing.

Owned you have been, once again. I highly doubt MS has better information than the Fed.

Then there's the blog's nonsensical "MBS's pay more." OF COURSE THEY DO! Because they're riskier, because of default and prepayment risk. Remember, MBS's are NOT guaranteed by the government; they are guaranteed by the agencies, which are currently in receivership.

Here's something that might learn you something:

http://www.stanford.edu/~stroebel/MBS%20Purchase%20Program%20-%20Stroebel%20and%20Taylor.pdf

Of course, they're not bloggers. They're Stanford University economists. But that shouldn't matter, should it?

Here's what they conclude: "We show that a sizable portion of the decline in mortgage [versus Treasury] spreads can be attributed to declines in default risk and prepayment risk...."

Your blogger says "The mortgage bonds of the giant housing-finance agencies Fannie Mae and Freddie Mac are considered as safe as US Treasurys...."

PURE CRAP. They are not. As mentioned, there is a default risk, and second of all, as mentioned, there is the prepayment risk, MAKING MORTGAGE BONDS THE MOST DIFFICULT BONDS TO PRICE THAT THERE ARE.

Just a true fact. I learned it in kindergarten.

Then, were that not enough, let's look at your MS figures. Actually, let's not. Let's just say that they are BALANCE SHEET FIGURES at the closing dates of fiscal quarters. BALANCE SHEET FIGURES, which tells you ABSOLUTELY NOTHING ZERO about what the banks held in their portfolios anytime between those BALANCE SHEET DATES.

Since you've obviously never even stepped inside of a bank beyond to make an ATM withdrawal, let me inform you that it is common knowledge that banks adjust their portfolios at the end of the reporting periods to make them look better - or, usually, less risky. Balance sheet figures AT a certain date are meaningless unless you know the average balances during the fiscal period, and have the statement of cash flows to make sense of what they're doing. And, as the Fed does, adjust them seasonally.

The Fed data, as I mentioned, are seasonally adjusted annual rates. And what they show is that there was an increase in "treasury and other agency securities" of 15.5% in 2009 and 15.1% in 2010. But real estate loans did not fall significantly in those years (-5.6% in both 2009 and 2010). What did fall SIGNIFICANTLY were interbank loans (-38.1% and -23.3%, respectively), and what did GROW were cash assets (+157.3% in 2008; +47.9% in 2009; and -7.8% in 2010; +47.6% in 2011).

So your theory - and/or that of the fool blogger you post - that banks replaced residential real estate loans with MBS's is JUST PLAIN FALSE. What they did do is stock up on cash and stop lending to other banks, because, a la Lehman, they were afraid of who might fail next.

In 2011, banks' total holdings of Treasury and other securities increased by a paltry 2.8%.

So except for 2 years in the depths of the worst financial crisis in the history of the world since the Great Depression, banks did increase their holdings of treasury and agency debt. But it was not at the expense of real estate loans; it was at the expense of interbank lending.

One more BITES THE DUST.

Then, since the very premise of your moronic blogger is wrong, there's really no need to go beyond that. But I will, since you need to be learned stuff. Your freaking blogger doesn't even know what a "current coupon" is. Let me enlighten you:

http://www.investopedia.com/terms/c/current_coupon.asp#axzz297e1uwgL

It is a measure of the prepayment risk of MBS's.

"See-- they have not been lending-- they have been buying MBS...."

Not according to the Fed they haven't. They've been hoarding cash. To the extent that they have been buying MBS's - not significantly, as shown - it's because the Fed was buying them so their price was going up.

Not even the Fed can force a bank to lend. They will lend when there is low risk. During the financial crisis they stopped interbank lending; there was no material change in mortgages held on their books.

Here is a chart of their mortgage originations:

http://ycharts.com/indicators/mortgage_originations

They are ALWAYS choppy and, in fact, have been going down steadily since the start of the housing boom, in 2002.

More coffee please. My Breville cost about $700 - I hope you don't get me that Dunkin' Donut shit you usually drink.

Ignored comment. Unhide
Ignored comment. Unhide
Comment removed.
Comment removed.

I'm having a DEELICIOUS coffee from my $700 Breville machine right now, Brooksie, before I take my Mercedes Benz out for a spin later on.

No Dunkin' Donuts crap for me.

Sorry, though, that you have ZERO understanding of financial statements, bank lending, or how the Fed works.

And are reduced to quoting a BLOGGER as authority.

HAHAHAHAHAHAHA!

Oh, Brooksie! More bad news for you:

"Like other big banks, Wells Fargo makes home loans before selling most of them to investors after attaching a government guarantee. Those gains totaled $2.61 billion in the third quarter, up 225 percent from $803 million in the third quarter of last year."

http://dealbook.nytimes.com/2012/10/12/wells-fargo-posts-earnings-of-4-9-billion-up-22/?ref=business

LOOK AT THAT! Banks sell most of their mortgages.

Which is what I said: "The vast amount of bank lending (mortgages, credit cards, car loans) no longer sits on banks' balance sheets, but rather is sold as ABS's to third parties."

To which your answer was: "FALSE".

And you're still not willing to admit you're wrong.

Rather, you focus on a BLOG that contains an unsubstantiated opinion by a BLOGGER that is completely unsupported by FACT, aka Federal Reserve data.

It is no wonder that you buy your coffee at Dunkin' Donuts.

Comment removed.
Comment removed.
Ignored comment. Unhide

Hmm. Still relying on bloggers?

When will you simply admit that you know nothing - as is obvious to all readers - since you still think that banks keep most of their mortgages on their books, when they clearly don't?

"I tell you that banks are buying mortgage backed securities because they are having difficulty finding qualified buyers to lend to..."

And the Fed says they are not, and you haven't provided any evidence that they are.

"that clearly displays banks and MM (Money Managers) are the number 1 holders of MBS followed by the Fed"

It clearly shows no such thing.

"The WSJ post closing prices for MBS daily"?

Really? Is that why they attach to it, "Indicative, not guaranteed"?

Every bond is different, youngling. That's why when you look at the same data on Barron's, they add this legend: "*EXTRAPOLATED from BENCHMARKS based on PROJECTS from Bear Stearns prepayment model, ASSUMING interest rates remain UNCHANGED."

http://online.barrons.com/public/page/9_0210-mrtgbksec.html

In other words, a nice, but meaningless figure, unless you think that there are only 12 mortgage-backed securities in the world, because there are only 12 in the chart.

Remember what happens when you ASSUME.

ps: based on "PROJECTIONS," not "PROJECT" - my bad typo!

And yes, despite the fact that MBS's are difficult to price you CAN use them to manage duration risk, provided that you don't plan on holding them for a long time.

Which is why what MBS's banks show in their portfolios are classified as "assets held for sale," aka, for trading, and not as investments.

Keep on ASSUMING - you're doing a good job of it.

Ignored comment. Unhide

First, you don't even know what they are: they are NOT closing prices, but rather model-estimated benchmarks for different types of notes with different nominal interest rates.

Second, treasury prices do not have the default and prepayment risks, and therefore all like treasuries trade at the same interest rate.

And third, yes, actually, they are extremely difficult to price, and that is not from me via my advanced certification from NYU in FIXED INCOME SECURITIES MANAGEMENT (you can look it up), it is the first thing you learn in the textbooks about pricing securities.

Here are some course notes on how to do it:

http://people.stern.nyu.edu/igiddy/ABS/absmbs.pdf

I'm very glad you don't trade MBS's, either, as they're not available for individual traders to invest in, though you could buy an ETF.

Ignored comment. Unhide
Ignored comment. Unhide
<< first    < prev       386 comments  -   page of 4        next >    

Add your comment

 

Categories:

Rentals (2,581)
Market (1,453)
Neighborhoods (559)
Boards (237)
Renovation (1,628)
Anything (2,299)
Sales (22,409)
Developments (571)
Financing (466)
Schools (99)
Brokers (334)
Services (458)