Fed's Fisher: U.S. housing downturn a serious problem

NF Reporter · 11-28-2006, 03:03 AM

Reuters - Lower oil prices and a strong U.S. commercial property sector will help offset the serious problem of a cooling housing market, Dallas Federal Reserve President Richard Fisher said in a newspaper interview published on Tuesday.

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waltky · 11-20-2007, 04:55 PM

Re-assessment by the Fed...

Fed sees economy slowing in 2008
November 20 2007: The central bank cut its forecast for next year from growth of 2.5%-2.75% to growth of 1.8% to 2.5%; market bets on rate cut in December.

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The Federal Reserve said that the decision to cut a key interest rate last month was a "close call," according to minutes from that meeting released Tuesday. But in a new economic outlook, the central bank also lowered its growth target for the economy in 2008, raising hopes that the Fed will cut rates again when it meets in December.

The Fed indicated in an addendum to its minutes that it now expects the economy to grow at about a 1.8 percent to 2.5 percent rate next year, down from a forecast in June of 2.5 percent to 2.75 percent growth. "I am surprised that their forecast for next year is as low as it is," said David Resler, chief economist of Nomura Securities International Inc. "The forecast is considerably weaker than it had been and that is the most significant development in this report."

And while Resler said he does not think a rate cut at the Fed's next meeting on Dec. 11 is a foregone conclusion, he thinks it is more likely now given what the Fed thinks about the prospects for the economy in 2008. To that end, according to the most recent price of futures listed on the Chicago Board of Trade, investors are pricing in a 92 percent probability that the Fed will lower its key federal funds future rate by a quarter of a point to 4.25 percent on Dec. 11.

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Swiss Re takes $1.1 billion subprime mortgage hit
Tuesday 20th November, 2007 - The world's biggest reinsurer Swiss Re has become the latest company to suffer a major loss as a result of the subprime crisis in the United States.

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The Zurich-based group announced on Monday that it wrote down SFr1.2 billion ($1.1 billion) from credit default swaps designed to provide protection for a client against a fall in the value of a portfolio. Shares in Swiss Re closed down 10.3 per cent at SFr87.55 in trading at the bourse. A detailed review of exposure in both the investment and trading portfolios revealed no similar concerns, the company said in a statement.

Swiss Re said the securities remained exposed to market value changes. However, it added that they were mitigated by the group's conservative market value estimated for collateralised debt obligations in the portfolio. 'You have to ask which reinsurance groups have similar announcements to make. Now comes the question whether this new-found transparency will be welcomed or whether the already weak share will be punished further,' analysts said.

Rival Munich Re said it had nothing new to announce. Earlier this month the company announced it was on track to achieve record results for 2007. The biggest Swiss bank, UBS, made a pre-tax loss of SFr726 million - the first in nine years - for the third quarter as a result of exposure to US market woes, while Credit Suisse reported a 31 per cent decline in its net profit for the third quarter to SFr1.3 billion.

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waltky · 11-27-2007, 10:44 PM

Hunker down for a long siege...

Housing Slump Far From Over
Nov. 27, 2007 - S&P Says 3rd-Quarter Housing Prices Dropped by Sharpest Rate in Index's 21-Year History

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U.S. home prices fell 4.5 percent in the third quarter from a year earlier, the sharpest drop since Standard & Poor's began its nationwide housing index in 1987 and another sign that the housing slump is far from over, the research group said Tuesday. The index also showed that prices fell 1.7 percent from the previous three-month period, the largest quarter-to-quarter decline in the index's history.

The S&P/Case-Schiller quarterly index tracks prices of existing single-family homes across the nation compared with a year earlier. A separate index that covers 20 U.S. metropolitan areas dropped 4.9 percent in September from a year earlier, with 15 metro areas posting declines. Only five metro areas Atlanta, Charlotte, N.C., Dallas, Portland, Ore., and Seattle showed an increase in prices, but S&P noted that the pace of the rise is decelerating.

Tampa and Miami led the index with the lowest year-over-year declines at 11.1 percent and 10 percent, respectively. It also showed drops in San Diego of 9.6 percent; Detroit, 9.6 percent; Las Vegas, 9 percent; Phoenix, 8.8 percent; and Los Angeles, 7 percent. The S&P's 10-area index decreased 5.5 percent in September from the previous year. Last week, the National Association of Realtors said that sales of existing homes fell in 46 states in the third quarter. However, the trade group said home prices rose in 93 of the 150 metropolitan areas surveyed.

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