BofA lays off property appraisers

Perhaps the property rebound, a la Housing Bubble 2.0, isn't so strong after all, given that interest rates have been rising and job growth is not booming yet.  Bloomberg reports (LINK, bold emphasis added):

Bank of America Corp., the second- largest U.S. lender, cut about 5 percent of staff in its appraisal unit last month as the firm rid itself of delinquent mortgages, said two people with knowledge of the move.

The job reductions at LandSafe, a business with more than 1,000 employees and acquired in the takeover of Countrywide Financial Corp., began Feb. 22, said the people, who requested anonymity because the dismissals were private. Appraisers, who estimate the market value of properties, and regional managers were cut, Tracy Sanderson, a LandSafe senior vice president, told staff in a Feb. 25 e-mail.

“While we have known we were overstaffed since the fall, we did everything we could to delay impacts as long as possible,” Sanderson said in the memo obtained by Bloomberg News. “We were hopeful that our volume would return and potentially reduce the number impacted.”...

About 70 percent of work done by LandSafe appraisers was related to transactions for soured loans, including the auction of bank-owned properties and short sales in which a borrower’s home is sold for less than the amount owed, said one of the people. The bank’s expected increase in originations this year isn’t enough to offset the drop in work resulting from having fewer delinquent loans to service, the person said.

The rest of the article discusses, among other things, declining mortgage volumes for the industry as a whole, which lately have mostly been refis rather than new loans.

This is not a disaster per se, but given the bullish action in bank and homebuilder stocks, it makes me wonder if the Street is not ahead of itself on this theme.

Some New Data Not Colored Green as in Green Shoots

Data points we are noting:

1. From TrimTabs July 21:


The disconnection between perception and reality about the U.S. economy is stunning. As Wall Street gains confidence that the economy is recovering, declines in wages keep accelerating. Adjusting for the “Making Work Pay” tax credit, income tax withholdings plunged 9.6% y-o-y in the past week and two days (Friday, July 10 through Monday, July 20) and 6.8% y-o-y in the past three weeks and two days (Friday, June 26 through Monday, July 20). These declines are much steeper than the drop of 5.3% y-o-y in the past three months. Both we and our favorite official Washington economist are unaware of any calendar quirks skewing the data.

2. Next: Subprime-Mortgage Loss Forecast Is Raised by Standard & Poor's:

July 22 (Bloomberg) -- Standard & Poor’s again boosted its projections for losses from U.S. subprime mortgages backing securities, reflecting increasing delinquencies and defaults amid slumping home prices and growing unemployment.

Losses on loans backing 2006 securities will reach an average of about 32 percent of the original balances, while losses for similar 2007 bonds will total about 40 percent, the New York-based ratings firm said in a statement today. In February, S&P said the losses would total an average of 25 percent for 2006 bonds and 31 percent for 2007 securities.

3. Gallup has a nice graph reflecting polling on how people see their companies: Hiring, laying off, or neither.

I am unable to cut and paste it; click HERE to view it. Per the Gallup.com home page, 4% fewer respondents reported that their employer was hiring on the last survey. A look at the graph (first link) shows stability between percent of employers expanding/hiring vs. shrinking their workforces/firing, from December 2008 till now. Of course, during this time unemployment has been soaring. I'm not loving this trend, especially given the reality of a work force that is growing steadily and thus requires net hiring to keep the unemployment rate from rising, and the "New Normal" that older people are deferring retirement. I know of one local MD in his 70s who had to go back into practice due to investment losses. I'm sure he's not the only professional in that situation.

4. Larry Summers gave some downbeat comments within the past few days, suggesting that he was uncertain as to the pace of the expected economic upturn.

5. From a technical basis, here's a 3-month chart of GE, with the red line representing the 50 day simple moving average and the green line the 200 day sma. Bad news:
GE has moved below its 50 day ma, which has begun to descend. It never reached its 200 day sma. Concurrently, Yahoo reports that analyst estimates for GE's 2010 earnings have also begun to descend, from 95 cents 3 months ago, to 94 cents 7 days ago, to 92 cents currently. BofA ("BAC") has a stronger pattern but is not all that different, and perhaps ominously, 2010 earnings estimates for BAC keep dropping; click HERE to view them and scroll down to view EPS trends, "Next year/Dec.-10".

Meanwhile, CNBC may now be reporting that something like 200% of all reporting companies have beaten "estimates" from the group of deep thinkers laughingly called "analysts". No matter that IBM had to somehow lower its SG&A an astounding 19% to wow these seers on the bottom line while missing shrunken revenue estimates. (Note: DoctoRx is no longer long IBM, having sold it on strength this week.) Someone should tell someone else that a company can't starve itself and yet win either an endurance running race or a strength contest.

Nonetheless, what we also somewhat laughingly refer to as "money" has to go somewhere if one has investable funds. People who can afford the risk probably should have some money apportioned into dividend-paying stocks with strong short-term and long-term charts and a history of being shareholder friendly.

EBR will discuss its favorites over coming days: in its estimation, these are among the best of a mangy lot of pre-owned "in"-securities.

Copyright (C) Long Lake LLC 2009

Signs of the Tines

Signs of the tines (read on to find out about the "tine-y" porcupine):

First, from Calculated Risk:

Friday, January 16, 2009

Layoffs: I read the news today, oh boy! (DoctoRx: About an unlucky man . . .)

by CalculatedRisk on 1/16/2009 05:33:00 PM

WSJ: Circuit City to Liquidate, Meaning 30,000 Job Losses

Bloomberg: GE Capital May Cut as Many as 11,000 Jobs This Year

WSJ: Pfizer to Cut Up to 2,400 Jobs

WSJ: Google Plans 100 Layoffs of Recruiters

AP: AMD to cut 1,100 workers, 9 pct of staff

Reuters: Hertz to cut more than 4,000 jobs

Bloomberg: WellPoint Cuts 1,500 Jobs, Blames ‘State of Economy’

AP: Blue Cross Blue Shield to cut up to 1,000 jobs

Tampa Bay Business Journal: Report: Layoffs looming at Clear Channel

Clicking on some of these links provides more bad news. Google is also closing some engineering offices. Two days ago, GE Aviation (jet engines) announced that it planned to eliminate over 1000 salaried jobs.

In addition, consider the following: Layoffs at wind turbine and solar parts manufacturers described in a NY Times article today.

Oil layoffs begin (Williston Herald)January 16, 2009 – 11:11 am About 150 people are no longer working for Nabors Drilling USA in Williston as falling oil prices have produced layoffs that are likely to expand.

Seattle has a more or less weekly layoff update, it appears. Click on the link for gory details if you want to listen to a brief audio report.

As an ex- New Yorker and animal-lover, the saddest layoffs relate to the following (from the Gothamist):

Bronx Zoo, NY Aquarium Face Layoffs

"There's more bad news for New York's animals, and the humans that take care of them: The Daily News is reporting that Bronx Zoo and New York aquarium staffs are facing layoffs in light of the proposed budget cuts. "As many as 130 staffers could be laid off," they told the paper, who reiterates that "The Wildlife Conservation Society, which runs the facilities, is facing $15 million in government funding cuts from its $103 million annual budget this year, and the state will cut off all funding in 2010." The layoffs will hit everyone (and the porcupine was already let go), from administration to sales to groundskeeping—sending both union and non-union employees to the unemployment office. The news was delivered to staff yesterday by WCS President Steven Sanderson, who told the paper that, in the end, if they can't afford to keep the animals, "then we have to try to find a better place for them."


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