Thursday, December 20, 2012

Existing Home Sales 12-20-12


TRADEX GLOBAL INTERNAL COMMENTARY

Existing home purchases increased 5.9% to an annual rate of 5.04 million!  This is the best number since November of 2009 and was way above most forecasters’ projections of an annual rate of 4.9 million.  Property values have risen 10% over the last 12 months as inventories dropped to the lowest levels in 11 years.  These numbers bode very well for our Liquid Real Estate Portfolio, as the underlying mortgage securities will benefit from rising home prices and improving severities when a home does need to be foreclosed upon.  Keep nimble – Michael Beattie

EXTERNAL RESEARCH COMMENTARY

Sales of previously owned homes rose more than forecast in November to reach a three-year high as lower borrowing costs sustained the U.S. housing rebound. Purchases of existing houses increased 5.9 percent to a 5.04 million annual rate, the most since November 2009, the National Association of Realtors reported today in Washington. The median forecast of 82 economists surveyed by Bloomberg projected an increase to a 4.9 million rate. Property values climbed 10.1 percent over the past 12 months as inventories dropped to the lowest level in 11 years. Record-low mortgage rates and an improved job market are boosting sales and cutting inventories, giving the market the opportunity to absorb foreclosures. Prices are rising as a result, which will probably draw more buyers seeking to take advantage of current affordability in housing, helping retailers such as Pier 1 Imports Inc. (PIR) and Lowe’s Cos. Inc. “The housing market is staged for continued improvement,” Anika Khan, senior economist at Wells Fargo Securities LLC in CharlotteNorth Carolina, before the report. “Underlying fundamentals are continuing to improve despite uncertainty. We’re seeing better labor market numbers, and that’s also reflected in better consumer confidence. Sales activity is going to be volatile but the underlying trend is still improving.” Economists’ estimates in the Bloomberg survey ranged from 4.59 million to 5.15 million. The prior month’s pace was revised to 4.76 million from a previously reported 4.79 million.

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Press Release: Tradex Global Advisors adds Veteran Investor Leonard Chaikind to its Investment Advisory Council


FOR IMMEDIATE RELEASE:


Tradex Global Advisors adds Veteran Investor Leonard Chaikind to its Investment Advisory Council


Greenwich, CT – December 17, 2012 – Leonard Chaikind was one of the first ever large institutional investors to invest both in Private Equity and Hedge Funds in the 1980’s.  During this period, he was the Administrator of all Shell Oil’s Savings and Retirement Programs.  “It is with great honor that Len has accepted this role with Tradex.  We are very lucky to have someone with decades of investment experience under his belt,” said Michael Beattie, Chief Investment Officer of Tradex.  In addition to advising Tradex in many areas, Len will also be involved with helping implement and launch a new product line.  This will include small, sector-focused, multi-manager funds targeting very specific investment opportunities, a single-strategy, short-biased high-yield credit fund and Tradex’s traditional, multi-manager, Liquid 50 Portfolio that focuses on very liquid trading opportunities within equity, volatility and mortgage strategies.

Leonard Chaikind founded Institutional Investors Consulting Company (IICC) in 1991 after retiring from the head position of Shell’s multi-billion dollar Pension and Benefits Programs.  Prior to this assignment, he was Treasurer of Far East and Australasia for Royal Dutch Shell where he coordinated over US $35 billion in major project financings.  Len enjoyed a wide variety of positions with Royal Dutch Shell and the Shell Oil Companies from 1957 to 1991.  After serving as the Finance Manager for both Shell Chemical and Shell Oil Products, he was appointed Regional Treasurer for Royal Dutch Shell in the Far East and Australasia, working out of Shell’s head office in London.  When Len headed up the Shell Savings and Retirement Programs, approximately 50% of the Pension Plans were managed internally by Len’s staff, with the rest being outsourced to various investment managers and consulting groups.  During this period, the Shell Funds were widely recognized by the industry to be one of the best.   In 1985, Len was one of the key founders of the Committee on Investments of Employee Benefit Assets (CIEBA) which currently represents approximately 115 of the country’s largest Pension Plans with assets well over $1.4 trillion and over 16 million participants.  Len was also one of the founders of the New York Stock Exchange Institutional Advisory Committee in 1987.  Both of these groups continue to be very active to this day.

Len likes to think of IICC as a “do good” investment bank, whose dual mission is 1) To help Institutional Investors, i.e. Pension Plans, Foundations and Endowment Funds operate more effectively, i.e. make better investment decisions, and 2) “To make the world a better place to live.”   In addition to being actively involved in the Private Equity arena, which includes hedge funds, IICC is also working on a number of major projects in places like Haiti, West Africa, China and Mexico, in addition, of course, to the USA.

Len holds a MBA from Harvard Business School and a BA from Harvard University in Economics.  Len graduated from the Loomis Institute in Windsor, CT and served in the US Navy (LTSG) during the Korean War.

About Tradex Global Advisors

Lead by Chief Investment Officer Michael Beattie and Director of Research Richard Travia, the principals at Tradex have spent 10 years together analyzing, evaluating and investing in small, niche hedge fund managers.  Tradex Global’s advisory services include proprietary due-diligence covering manager competence and ethics, performance monitoring, liquidity assessments, investment policy evaluations, manager selection, fund-of-funds, customized managed account portfolios and single hedge fund services.  Opened in 2004 by Michael Beattie, Tradex Global Advisors is part of The Tradex Group. Headquartered in Greenwich, CT, The Tradex Group manages assets for institutional investors which include some of the largest pension plans in Europe.
For more information:  Please contact Richard Travia at richard@thetradexgroup.com or 203-863-1537.

MBA Mortgage Applications 12-19-12


TRADEX GLOBAL INTERNAL COMMENTARY

The Mortgage Bankers Association reported that application totals (re-fi and new home applications) fell 12.3% in the week ending December 14th. The refinancing component fell a larger amount, 13.8%, while new home applications fell 4.8%. The re-fi share of total applications also fell to 83% from 84% in the prior week. Fixed 30-year conforming rates rose slightly to 3.50% from 3.47% the week before. These weekly numbers can be volatile and slightly misleading, but we do believe that the re-fi wave is cresting and re-financings will slow in the first half of 2013. This is a good report and gives us greater confidence in our IO (interest only derivatives) portfolio that we plan on increasing. An underappreciated statistic is that banks have approximately 265k employees to work with borrowers that want to refinance their existing loans or to get a new mortgage, down from a peak of 500k employees.  A good amount of employees at those banks are doing ‘workouts’ and foreclosures. This may be intentional on the banks part to slow down the whole business and wait for higher rates. That is not fact, but I would not discount it. Keep nimble – Michael Beattie  

EXTERNAL RESEARCH COMMENTARY

Applications for home mortgages fell to their lowest level since early November last week and the purchase index fell after a five-week climb, an industry group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 12.3 percent in the week ended December 14. The MBA's seasonally adjusted index of refinancing applications fell 13.8 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, fell 4.8 percent, dropping from its high point on the year. The refinance share of total mortgage activity fell to 83 percent of applications from 84 percent the week before. Fixed 30-year mortgage rates averaged 3.50 percent in the week, up three basis points from 3.47 the week before, which was the lowest in the history of the survey. The rise in rates came even with the Federal Reserve's announcement last week that it would purchase more Treasury securities each month. "Rates increased in the second half of the week," said Mike Fratantoni, MBA's Vice President of Research and Economics. The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

Tradex Global Advisory Services, LLC
investorrelations@thetradexgroup.com 
203-863-1500

@Tradex_Global

Housing Starts 12-19-12


TRADEX GLOBAL INTERNAL COMMENTARY

Building applications issued in November rose to a four year high. Permits climbed 3.6% to 899k annually, the most since July of 2008. The forecast by economists was for 875k, so this was a pleasant surprise. Housing starts fell 3% to an annualized rate of 861k, but the 3 month average rate of housing starts was the strongest since August 2008. Record low mortgage rates and a slightly improving jobs market will probably make 2013 the best year for builders since 2007. The one variable is the lack of private mortgage origination.  The GSEs are making 9 out of 10 of every mortgage origination. Private banks need to start lending to keep this trend alive. This is positive news for our Liquid Real Estate Portfolio (up 14% ytd), as improving fundamentals will decrease defaults and severities will improve on properties that do end up falling into foreclosure. Also, we believe that we are close to the end of the refinance wave that have put some IOs (interest only derivatives) under pressure this year. This asset class may be the biggest winner in 2013 and we will watch closely and increase allocations as pre-pays start to slow. Keep nimble - Michael Beattie

EXTERNAL RESEARCH COMMENTARY

The number of building applications issued in November rose to a four-year high, a sign the U.S. housing-market recovery will extend into 2013. Permits, a proxy for future construction, climbed 3.6 percent to an 899,000 annual rate, the most since July 2008 and exceeding the 875,000 median forecast of 58 economists surveyed by Bloomberg, Commerce Department figures showed today in Washington. While housing starts fell 3 percent to an 861,000 pace, the average rate from September through November was the strongest since the three months ended August 2008. Record-low mortgage rates and an improving job market are giving Americans the confidence and wherewithal to buy a house, boosting builders such as Toll Brothers Inc. (TOL), which are now able to raise prices. Gains in housing will help shore up economic growth this quarter as businesses curb spending on concern lawmakers will fail to avert the tax increases and spending cuts slated to take effect in 2013. “We’re headed higher and next year is going to be the best year for housing starts that we’ve seen since 2007,” said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, who projected starts would drop to an 865,000 pace. “Housing is coming back.” Stocks were little changed as President Barack Obama and Republicans continued budget talks. The Standard & Poor’s 500 Index fell 0.2 percent to 1,443.52 at 10:36 a.m. in New York.


Tradex Global Advisory Services, LLC
investorrelations@thetradexgroup.com 
203-863-1500
@Tradex_Global

Thursday, November 29, 2012

Jobless Claims 11-29-12


TRADEX GLOBAL INTERNAL COMMENTARY

Jobless claims decreased by 23k to 393k in the week ended November 24th.  The Mid-Atlantic states hit hard by Sandy have stabilized.  The after effects of the storm will create some volatility in the claims numbers, but probably will shrink payrolls in the next month because of the lackluster economic growth base.  Economists had forecasted 393k in claims, so the number is a little better than consensus…Who cares though?  The job picture still stinks, the private sector in general still stinks and is in no shape to replace the Fed as the growth and liquidity engine.  I have said this for 3 years and still do not see any reason to change my tune…The Fed will step up its QE to 80 billion a month or so for the foreseeable future, rates will stay low and the economy will sputter along at 2% GDP.  I like the improvement in housing and see this bright spot in the economy as a tailwind for our Liquid Real Estate Portfolio.  Keep nimble – Michael Beattie

EXTERNAL RESEARCH COMMENTARY

Fewer Americans filed first-time claims for unemployment insurance payments last week as the labor market disruptions wrought by superstorm Sandy ebbed. Applications for jobless benefits decreased by 23,000 to 393,000 in the week ended Nov. 24, Labor Department figures showed today. Economists forecast 390,000 claims, according to the median estimate in a Bloomberg survey. The drop in claims indicates the job market in the mid- Atlantic region, which employs about 14 percent of U.S. workers, may be stabilizing after Sandy put some area residents out of work at the start of the month. Apart from the storm-related damage,job creation will probably be limited as companies navigate the global economic slowdown and U.S. fiscal outlook. Claims are “going to be distorted for a period of time by the after-effects of the storm,” said James Shugg, a senior economist at Westpac Banking Corp. in London, who forecast applications would drop to 395,000. “We’ve been surprised by the strength of hiring, but we’re anticipating a sharply lower number for the payrolls in the next month because there’s not going to be a strong enough economic growth base.” Estimates for first-time claims ranged from 350,000 to 430,000 in the Bloomberg survey of 49 economists. The previous week’s figure was revised to 416,000 from a previously reported 410,000.

Tradex Global Advisory Services, LLC
investorrelations@thetradexgroup.com 
203-863-1500

@Tradex_Global

MBA Mortgage Applications 11-28-12


TRADEX GLOBAL INTERNAL COMMENTARY

Total mortgage applications fell last week!  The total application activity dropped 0.9%.  The Index of Refinancing Applications had a bigger drop of 1.5%, but the percent of refinancing activity still held up at 81%.  The gauge of loan requests for “home purchases” rose 2.6% from the previous week.  This goes hand-in-hand with rising home prices, according to the latest Case-Shiller survey.  Mortgage rates averaged 3.53% in the last week, down 1 basis point from the prior week and closer to the historical lows.  We have been saying that we believe the refinancing wave is probably cresting and will taper off slowly in the next two quarters.  This is all good news for our Liquid Real Estate Portfolio.  Keep nimble – Michael Beattie

EXTERNAL RESEARCH COMMENTARY

Applications for U.S. home mortgages fell last week, though demand for mortgage purchases rose for a fourth straight week, an industry group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, dropped 0.9 percent in the week ending November 23. The MBA's seasonally adjusted index of refinancing applications slipped 1.5 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, rose 2.6 percent. The refinance share of total mortgage activity was unchanged at 81 percent of applications. Fixed 30-year mortgage rates averaged 3.53 percent in the week, down 1 basis point from 3.54 percent the week before. The drop brought rates closer to historical lows in the wake of the Federal Reserve's September announcement that it would move to boost the economy through the purchase of mortgage-backed securities. The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

Friday, November 23, 2012

Housing Starts 11-20-12


TRADEX GLOBAL INTERNAL COMMENTARY

Housing starts skyrocket!!!  October’s starts were up 3.6% from September, and were the strongest since July 2008.  The 894k annualized rate was sharply higher than economists expected.  The multi-family sector was the biggest surprise, 300k vs 268k in September.  Single family starts dropped slightly.  The Western region had the sharpest monthly rise, 232k vs 198k in September.  The broad improvement in housing is a much needed boost for the slowing economy.  The sector has gone from most hated to most loved.  We have been focused on liquid real estate for the past few years and believe that we are entering the best risk/reward timeframe since we began that focus in 2010.  House prices inching up will help our investments in distressed RMBS; potential for higher interest rates will give a big boost to our IOs (interest-only strips of mortgages) as pre-payments will slow); and finally as the mortgage sector normalizes and the Fed stops manipulating the market, there will be a great opportunity to be short lower-coupon mortgages that have risen way too far in price!  This is a good showing for the sector and we expect more good news in the future.  Keep nimble and we hope you had a wonderful Thanksgiving - Michael Beattie

EXTERNAL RESEARCH COMMENTARY

Housing starts rose to their highest rate in more than four years in October, suggesting the housing market recovery was gaining steam, even though permits for future construction fell. The Commerce Department said on Tuesday housing starts increased 3.6 percent to a seasonally adjusted annual rate of 894,000 units -- the highest since July 2008. The report was the latest to show the broadening housing market recovery was now entrenched. Economists, who had expected groundbreaking to slow to an 840,000-unit rate, said the housing strength laid a foundation for faster economic growth next year. "The broad improvement in home prices, home equity, starts, and inventory clearing are key developments that position the economy for stronger growth next year, and beyond," said Eric Green, chief economist at TD Securities in New York. The housing market has decisively turned around after an unprecedented collapse that landed the economy in its worst recession since the Great Depression. The recovery, marked by rising home sales, prices and building activity is being driven by pent-up demand and record low mortgage rates. Homebuilding is expected to add to gross domestic product growth this year for the first time since 2005. Though home construction accounts for only about 2.5 percent of GDP, economists estimate that for every new house built, at least three new jobs are created. Last month's data led some economists to raise their fourth-quarter growth estimates. Even so, growth in the last three months of the year is expected to be soft, largely because businesses appear reluctant to invest given the prospect for deep government spending cuts and higher taxes next year. Fourth-quarter growth forecasts currently range between an annual rate of 1 percent and 2.2 percent. The Commerce Department said superstorm Sandy, which slammed the East Coast in late October, had a minimal impact on the data. Economists expected the storm to weigh on homebuilding in November, with rebuilding in the months ahead mitigating the impact. The upbeat homebuilding report buoyed housing-related shares on Wall Street, with PulteGroup Inc -- the second-largest U.S. homebuilder -- soaring more than 6 percent. The overall housing sector index was up 2.5 percent in early afternoon trade, outperforming a broadly weak shares market.


Tradex Global Advisory Services, LLC
investorrelations@thetradexgroup.com 
203-863-1500
@Tradex_Global

Thursday, November 15, 2012

MBA Mortgage Applications - 11/14/12


TRADEX GLOBAL INTERNAL COMMENTARY

Mortgage applications rebounded.  The Mortgage Bankers Association said that its seasonally adjusted index of mortgage application activity (which includes both refi’s and home purchase) rose 12.6% in the week ended November 9th.  States hit by Sandy were up more than 60% after almost no activity from the week before.  The refinance component was up 13.1% and the new home purchase index was up 11%.  The share of refi’s to the total was 81%, up from 80% last week.  The 30-year conventional mortgage averaged 3.52%, down 9 bps.  As I have been saying, we believe refinancings are probably cresting and we should see pre-payments at peak speeds in the next 2 months, followed by a dramatic slowing in the first quarter of 2013.  We are bullish on IO securities as part of our Liquid Real Estate Portfolio.  We also think that the RV strategy in the portfolio has some exciting opportunities ahead as some lower coupon MBS has gotten overpriced in the secondary market and could sell off dramatically with any hint of a rate move or a change in policy on principal forgiveness.  Both of these would be negative for the lower coupon bonds.  Markets are not reacting to anything positive and we are seeing another round of red on the screen.  We increased hedges and believe “prudent” is the word of the day.  Keep nimble – Michael Beattie

EXTERNAL RESEARCH COMMENTARY

Applications for U.S. home mortgages jumped last week, rebounding after a massive storm depressed applications on the East Coast and as a fall in interest rates to a new low spurred demand, data from an industry group showed on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 12.6 percent in the week ended Nov 9. Application volume in New Jersey more than doubled over the week, while volume in Connecticut and New York increased more than 60 percent, Mike Fratantoni, MBA's vice president of research and economics, said in a statement. The seasonally adjusted index of refinancing applications surged 13.1 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, climbed 11 percent. The refinance share of total mortgage activity rose to 81 percent of applications from 80 percent. Fixed 30-year mortgage rates averaged 3.52 percent, down 9 basis points from 3.61 percent the week before. Interest rates had hit new lows following the Federal Reserve's September announcement of its latest aggressive stimulus plan, though rates had edged back up in subsequent weeks. The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

Tradex Global Advisory Services, LLC
investorrelations@thetradexgroup.com 
203-863-1500

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Wednesday, November 14, 2012

NFIB Small Business Optimism Index


TRADEX GLOBAL INTERNAL COMMENTARY

“Steady as she goes” was the phrase for small businesses in October, according to NFIB.  The monthly index tipped up a little to 93.1 from 92.8, and there was little change to any of the components making up the index.  The index remains in a narrow “recession” level range.  Overall, the sentiment in small and large businesses is “do nothing until the government shows its hand”!!!  I have been very focused lately looking at the hi yield space as we get ready to launch our short-biased HY fund.  It is amazing that with very slow growth, a fiscal cliff down the road and Europe mired in a depression, the companies rated “junk” have the ability to raise capital in the bond markets at crazy, historically low yields.  I hate to say this, but I really believe the HY credit market will start cracking very soon and this NFIB report helps confirm it.  Keep nimble – Michael Beattie

EXTERNAL RESEARCH COMMENTARY

Economic conditions faced by small business owners were little changed in October, amid continued anxiety about the future, fueled largely by political uncertainties. On Tuesday, the National Federation of Independent Business reported its monthly index tipped a touch higher to 93.1, from 92.8 the month before. There was little change in any of the components making up the index, with the report saying the overall index remained “in a small, narrow ‘recession’ level range.” The October NFIB survey was compiled before elections that saw President Barack Obama hold his office, amid continued Democratic control of the Senate, and Republican control of the House of Representatives. The uncertainty at the heart of the NFIB survey arises largely from the inability of lawmakers to tackle what’s called the fiscal cliff.

Tradex Global Advisory Services, LLC
investorrelations@thetradexgroup.com 
203-863-1500

@Tradex_Global

Thursday, November 8, 2012

MBA Mortgage Applications 11-7-12


MBA Mortgage Applications 11-7-12

TRADEX GLOBAL INTERNAL COMMENTARY

Mortgage activity fell 5% for the week ending November 2nd.  Sandy was a good part of the decline in applications in the East, as activity was off more than 50% in the tri-state area.  The refinance share of the activity was still 80% of applications, though.  The fixed 30-year mortgage rate was down to 3.61% from 3.65% the week before.  The election result may cause us to see mortgages in the 3.50% range and bottoming there, but we also still believe that the “refi-wave” is cresting and that we are close to the end.  We believe that IO securities are really starting to look attractive and we will take advantage of that opportunity as we have in the past.  Keep nimble – Michael Beattie

EXTERNAL RESEARCH COMMENTARY


Applications for home mortgages fell last week as Superstorm Sandy battered the East Coast and disrupted normal business activity for millions of people, an industry group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity fell 5 percent in the week ended November 2. The group's seasonally adjusted index of refinancing applications and its index for loan requests for home purchases both dropped about 5 percent as well. The storm had "a significant impact on application volumes in the East" said Mike Fratantoni, MBA's vice president of research and economics, in a statement. Fratantoni said that applications fell more than 60 percent in New Jersey, nearly 50 percent in New York and almost 40 percent in Connecticut, with other nearby states seeing smaller declines. Certain states in other parts of the country showed increases in loan application volume last week, Fratantoni said. The refinance share of total mortgage activity stayed at 80 percent of applications, and fixed 30-year mortgage rates averaged 3.61 percent in the week, down 4 basis points from 3.65 percent the week before. The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

Tradex Global Advisory Services, LLC

investorrelations@thetradexgroup.com 
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Wednesday, November 7, 2012

Bubble Time!

The Basel Committee is considering allowing banks to hold single A credits for coverage ratios.  If this is approved, BBB and lower credits will reprice and make a stronger case for shorting high yield. Wow!  Basel  cranking up the risk!  Currently single A credits are priced to yield 2.2%, down from a yield last year of 4.0%.  They could possibly be headed below 2%.  Bubble Time!

Tradex Global Advisory Services, LLC
investorrelations@thetradexgroup.com 
203-863-1500
@Tradex_Global

Monday, October 22, 2012

MBA Mortgage Applications, Week of October 19th



TRADEX GLOBAL INTERNAL COMMENTARY

The MBA said that its seasonally adjusted index of mortgage applications fell 4.2% during the week ending October 12th.  The home purchase component increased 1% from the previous week (3% mortgages make a difference!).  The refinance component fell 5.3% from the previous week (see my comment on peak prepayment speeds from 2 weeks ago), while the share of refinancings to total applications decreased to 82% from 83%.  We think two things are clear:  1) New home purchases are clearly gaining traction, and 2) Refinancing is probably going to crest in the next quarter.  We believe that both of these will be a major positive to the housing industry, the employment situation and for Tradex liquid real estate portfolios.  Keep nimble – Michael Beattie

EXTERNAL RESEARCH COMMENTARY

Applications for U.S. home mortgages fell last week, but demand for purchase loans, a leading indicator of home sales, reached the highest level since June, data from an industry group showed on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 4.2 percent in the week ended October 12. The seasonally adjusted purchase index, which measures loan requests for home purchases, increased by 1 percent over the previous week, putting the index at its highest level since June. The data was adjusted to account for the Columbus Day holiday. The MBA's seasonally adjusted refinance index fell 5.3 percent from the previous week. The refinance share of total mortgage activity decreased to 82 percent of total applications from 83 percent the prior week. Fixed 30-year mortgage rates rose 1 basis point to average 3.57 percent. Still, they remain near all-time lows following the Federal Reserve's latest economic stimulus program. The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA. 

Tradex Global Advisory Services, LLC
investorrelations@thetradexgroup.com 
203-863-1500
@Tradex_Global

Housing Starts, Week of October 19th



TRADEX GLOBAL INTERNAL COMMENTARY

Housing starts surged 15% in September to the highest level in four years.  Beginning home construction jumped last month to an annualized rate of 872k, the fastest pace since July 2008.  This makes it fairly clear that housing is off the bottom and is in the midst of a recovery.  Population growth and household formations have increased, while the excess inventory of quality homes has dwindled.  I think that these numbers and the lack of recent building activity will go a long way to revive employment in the housing sector that has lost 2 million jobs since the end of 2007.  Shares of homebuilders rallied (which is not great for our hedges).  The August number was revised up to 785k (annual rate) from 750k, and over the last 12 months work has begun on 34.8% more new homes, the biggest year-over-year increase since April.  Building permits (a proxy for future construction) also jumped to an 894k annual rate.  This exceeded forecasts, with the number of permits rising by 45% since September 2011, the biggest annual jump since 1983.  No matter how you spin these numbers, housing is rebounding and this should help employment.  Keep nimble – Michael Beattie

EXTERNAL RESEARCH COMMENTARY

Housing starts in the U.S. surged 15 percent in September to the highest level in four years, adding to signs of a revival in the industry at the heart of the financial crisis. Beginning home construction jumped last month to an 872,000 annual rate, the fastest since July 2008 and exceeding all forecasts in a Bloomberg survey of economists, Commerce Department figures showed today in Washington. An increase in building permits may mean the gains will be sustained. “It’s no longer a question of whether the industry is rebounding,” Larry Sorsby, chief financial officer of Red Bank, New Jersey-based Hovnanian Enterprises Inc. (HOV), the best-performing homebuilding stock this year, said in a telephone interview today. “There is clear evidence that we have bounced off the bottom and are in the midst of a recovery.” A pickup in sales stoked by record-low mortgage rates and population growth combined with dwindling supply indicates construction can continue strengthening, contributing more to economic growth. Improving demand may also help revive a part of the job market that’s seen construction employment fall by almost 2 million since the end of 2007. “This is good news for the labor market,” said Anika Khan, a Charlotte, North Carolina-based senior economist at Wells Fargo & Co., the biggest mortgage lender in the U.S. If single-family starts “continue to show this positive momentum, and we expect they will, we’ll likely start to see some construction jobs come back.”

Tradex Global Advisory Services, LLC
investorrelations@thetradexgroup.com 
203-863-1500
@Tradex_Global

Wednesday, October 10, 2012

Mortgage Applications, Week of October 5th



TRADEX GLOBAL INTERNAL COMMENTARY

Mortgage applications fell last week, but “new purchases” rose to the highest levels since June.  Mortgage refinancing applications fell 2%, while applications for home purchases rose 2.4%.  Despite the decline in refinancing, we believe that the level of prepayments will stay elevated for another quarter and will taper off near year end.  30-year mortgage rates were at 3.56%, slightly higher than 3.53% the week before.  The MBA survey covers 75% of US residential mortgage applications.  I think that this report has some noise to it, but it is a slight positive that “new home” purchase applications is rising.  Keep nimble – Michael Beattie

EXTERNAL RESEARCH COMMENTARY

Applications for home mortgages fell last week as demand for refinancing eased slightly but purchase applications rose to their highest levels since June, an industry group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 1.2 percent in the week ended on October 5, 2012. The MBA's seasonally adjusted index of refinancing applications fell 2 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, rose 2.4 percent. Despite the decline of refinance applications, their volume is still near three-year highs, Mike Fratantoni, MBA's vice president of research and economics, said in a statement. Fixed 30-year mortgage rates averaged 3.56 percent in the week, up 3 basis points from 3.53 percent the week before. Still, they remained near their lowest levels in the wake of the Federal Reserve's latest aggressive program to boost the economy. In a program known as quantitative easing, or QE3, the Fed said in September that it will buy $40 billion in mortgage-backed securities a month until the job market improves. The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

Tradex Global Advisory Services, LLC
investorrelations@thetradexgroup.com 
203-863-1500
@Tradex_Global