Germany sells bonds at NEGATIVE rates

[errolanderson]

How nervous is this market?

Germany continues to sell bonds (6-
month?) at a negative return of 0.6%.
And apparently investor demand is huge.
Europeans appear to be flocking to
Europe's largest economy as a safe
haven.

The threat of the breakup of the
Eurozone and equity market unease are
likely at the root of this bizarre
investment decision.

Big Ben (IMO) will likely present more
rhetoric and 'NO' stimulus Friday
morning from Jackson Hole. The U.S. Fed
appears divided in regards to QE3.

To me, the U.S. Fed is now becoming a
distraction to markets and an impediment
for markets to function properly. Still
believe QE3 is as much as a poison to
the U.S. economy as a benefit. There
appears to be a growing anti-QE3
expression in the U.S. of late.

Ahh . . . to be a fly on the wall at the
Fed meetings.

Errol

[hedgehog]

uk banks have admitted that the top 5% of richest people have benefited the most from QE.

[LEP]

So are Canadian farmers in the top 5 %? We have benefitted big time
from QE.

Food prices would not be where they are without it.

[hedgehog]

i dont agree with that, farmers are not in the top 5%, and grain is a good price because it is scarce, no other reason.

[charliep]

Is the definition of top 5 % profitability or equity/net worth? I suspect farmers are in the top 5 % of net worths. Tongue in cheek that will be get me killed but most farmers return on their paid for investment called land (realizing the investment doesn't mean much until sold) exceeds the profit from their business. To relate to the negative return on bonds, how does land compare as an investment relative to all the other safe places an investor can hide money these days?

[ALLFARMER]

Maybe we are?? I heard the statistic that if you
have an I Phone your in the top 12% of worlds
richest.

[cottonpicken]

If your net worth is 50,000 your in the top 5%(i think
old stat from memory).

I understand german bonds going negative,i don't
understand why canada isn't in a currency
appreciation shell shock with negative yields(although
they are low with demand,the only reasons i can think
of are,not liquid and big enough or we are about to
get kicked in the teeth because of hidden factors.

If your waiting for a truck to dump into here is a
read,not hijacking the thread but is along the same
lines.

Canada Mortgage and Housing Corporation saw profit
from its core mortgage insurance business fall in the
latest quarter, as losses from claims increased.

The lower profits also come as Ottawa has taken
steps to curb the crown corporation’s growth,
including enforcing a hard limit of $600 billion on the
amount of insurance that it can have in force.

CMHC’s total insurance-in-force crept up to $576
billion at the end of June, the mortgage lender said in
its second-quarter results, which were released
Wednesday. To keep it in check CMHC has
dramatically curbed the amount of portfolio insurance
it is offering to banks. And it said that its future sales
of mortgage insurance will continue to be offset as
each year Canadians pay off about $60 billion of
mortgages that it has already insured.

The crown corporation’s losses on mortgage
insurance claims rose to $168 million for the three
months ended in June, up from $144 million in the
same period of 2011.

That’s part of the reason why profit from CMHC’s
core mortgage insurance business fell to $255
million, down from $341 million. The profit was also
hurt because CMHC recognized paper losses on a
mutual fund investment as international stock
markets fell.

CMHC said that the moves that Finance Minister Jim
Flaherty made this summer to tighten the housing
market, including reducing the maximum length of
insured mortgages to 25 years from 30 years, will
cause its homeowner insurance volumes to be lower
this year than previously expected.

On a conference call with reporters, officials said that
it’s too early to determine exactly what impact the
rule changes will have. CMHC said that while there
have been considerable swings in monthly estimates
of housing starts activity, the trend has been rising
and “some reduction of the current robust pace of
housing starts is expected later this year and next
year.”

Total residential sales through the Multiple Listings
Service will remain relatively stable for the remainder
of this year and next, maintaining balanced market
conditions in most Canadian housing markets, CMHC
predicts.

“House prices are expected to grow at a rate close [to]
or slightly below inflation,” Mathieu Laberge, CMHC’s
deputy chief economist, told reporters. Growth in
employment, net migration flows and incomes are
among the factors supporting the market, he added.

Higher home prices are helping to keep the revenue
that CMHC takes in from mortgage insurance
premiums up even though the growth of its mortgage
insurance portfolio is slowing.

In total, including its securitization business and
other activities, CMHC reported second-quarter
profits of $335 million, down from $383 million a
year ago.

The crown corporation said that the volume of
portfolio insurance it is offering has been about 40
percent lower so far this year than last year. Portfolio
insurance is a product that banks buy from CMHC
which covers entire portfolios of lower-risk
mortgages with higher down payments.

Banks like it because once those mortgages are
insured, they can be securitized or sold into bonds.
Portfolio insurance accounts for about 43 percent of
CMHC’s total insurance-in-force, and the crown
corporation is now making only a small amount
available to banks as it seeks to stay within its $600
billion limit.

[cottonpicken]

Food for thought,when the american housing bubble
burst its median home price was 40%LOWER than
what canadas is today,it then dropped upto 40% in
some markets.

If we magically have a 5% decline year over year we
are looking at an additional 30 billion dollar
additional budget expense.

And all are banks go tits up.

[cottonpicken]

So obviously the best investment today is a credit
default swap on credit union bank branches in
vancouver and toronto.

[cottonpicken]

And yes default swaps and the rest of the derivatives
trade is akin to making hand grenades legal in
baseball.

Imagine the commentary"tony batista steps upto the
plate and the first pitch is inside ball,heres the pitch
and boom rodriqes threw a hand grenade,batista
looks hurt and with his arm in the dugout he maybe
out forever although the cardinals have lost their
backstop and we need a new ump,now a word from
our sponsors"

Even i would watch baseball.

[errolanderson]

Friday may be real volatile . . . .

Bernanke speech

Russian Ag ministry meets

Is the foam about to come off the stock
market?

Kansas may get up to 12 inches of rain
from Hurricane Issac

Weekly soybean exports above
expectations.

Weekly corn exports below expectations.

Is crude oil ripe for a sell-off?

Europe officially in a recession. Give
me a break . . . it's a depression.

Tomorrow is also Friday in front of a
long weekend.

[liberty]

It must be a topsy-turvy world we live in when you lend money to a bank and they pay you less than the original amount when they pay off the loan. This strategy speaks to the palpable fear that European investors have about the state of many economies in the EU. They'd rather lose some money by parking their assets in a German bank as opposed to losing it all by leaving it in a Spanish or Greek bank.

When a German bank is doing this, its a sign that they are being deluged with more investment money than they know what to do with.

Look for countries like Spain to exit the Euro in the near future. That way, they can resurrect their old currencies and slap on capital controls to staunch the bleeding from their banking system, something that I bet is not allowed under the Euro system. Many investors probably know this is coming, and want to get their money to a safer place before it happens.

[cottonpicken]

friday was volatile!

6% portfolio swing in 20 minutes,thanks for the near
heart attack ben.