If You Thought the Housing Meltdown Was Bad… Doug Hornig, Senior Editor, (Casey Research):

…wait until you see what’s in the cards for commercial real estate.

That’s right, the next train wreck will be in commercial real estate. Couldn’t be worse than last year’s residential market crash? That remains to be seen. But it’s coming soon, probably as early as the second quarter of next year, and there’s nothing that can prevent it. The government will intervene, trying desperately to delay the day of reckoning, and may even succeed. For a while. But make no mistake about it, that train is going off the tracks no matter what.

Every part of the sector – from multifamily apartment buildings to retail shopping centers, suburban office buildings, industrial facilities, and hotels – has accumulated a huge amount of defaulted or nonperforming paper. It’s an impossible, swaying structure that cannot long stand.

Just ask Andy Miller.

Andy

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While I touched on unemployment duration at the end of my last blog, this is a very important subject and deserves a bit more elaboration. Quite simply being out of work for three or four weeks is a very different experience with very different economic implications than being out of work for six months to a year or more. The focus on the total number of unemployed obscures that reality. The thing that makes this recession so much different than the ones that have gone before it is how long people are staying out of work once they become unemployed. Yeah if you get laid off for a few weeks, it can be a pain in the butt, but essentially it is just an unplanned vacation. It does not really affect your long term financial solvency, nor do your job skills diminish significantly. After six months, regular state unemployment ...

The October employment report came in weaker than expected as the country lost 190,000 jobs, rather than the 175,000 expectation. It was, however, an improvement over the 219,000 lost in September, but worse than the 154,000 jobs lost in August. Both the September and August job losses were revised sharply lower. As of last month it was thought that we lost 263,000 jobs in September and 201,000 in August. So in that context, missing expectations for October by 15,000 does not seem that bad. Of course, it is bad if you happen to be one of those losing your job. Based on the establishment survey we have now lost 7.3 million jobs since the recession started.

In general though, the pace of job losses has been slowing, especially if you step back and look at the big picture. Over the last three months, the economy has been dropping an average of

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For Immediate Release

Chicago, IL – November 5, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Time Warner Inc. (TWX), Fannie (FNM), Freddie (FRE), Citigroup (C) and Bank of America (BAC).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Wednesday’s AnalystBlog:

Time Warner Tops Zacks Consensus

Despite tough macro-economic conditions, Time Warner Inc. (TWX), the global leader in media and entertainment businesses, reported better-than-expected third-quarter 2009 results that topped the Zacks Consensus Estimate.

The quarterly earnings of 61 cents a share beat the Zacks Consensus Estimate of 52 cents, but

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The Federal Reserve decided to keep the Federal Funds rate unchanged at the meeting it concluded today, as expected. Below is the current Fed Statement along with the one from their September meeting in paragraph-by-paragraph format, with my translation and commentary interspersed. As the graph below shows, the market is expecting the Fed to remain on hold, with Fed Funds between 0 and 25 basis points for an extended period. The graph shows the expected outcomes for the January meeting (before today’s announcement) from the Cleveland Fed. The market set the odds of anything other than standing pat at either today’s meeting or the December meeting effectively at zero. Reading off the chart, it looks like about a 95% probability of no action in January as well. I doubt we will see the Fed raise rates before the third quarter of 2010. The Fed is ...

David Einhorn, highly respected hedge fund manager of Greenlight Capital and author of “Fooling some of the people all of the time” yesterday delivered the keynote address at the Value Investing Congress. His full speech can be accessed here, but Rolfe Winkler of Reuters has very handily published the highlights, as posted below.

On Bernanke and Geithner: Presently, Ben Bernanke and Tim Geithner have become the quintessential short-term decision makers. They explicitly “do whatever it takes” to “solve one problem at a time” and deal with the unintended consequences later. It is too soon for history to evaluate their work, because there hasn’t been time for the unintended consequences of the “do whatever it takes” decision-making to materialize.

On too big to fail and the true lesson of Lehman: The proper way to deal with too-big-to-fail, or too inter-connected to fail, is to make sure

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Today's New York Times has an excellent article on the difficulty that small businesses are still having in getting loans. While the capital markets have freed up, and as a result larger firms are able to tap the capital markets for bonds and commercial paper, small businesses cannot do that. For very small businesses, the main sources of credit -- home equity loans and credit cards -- are drying up. Now it looks like one of the biggest lenders to slightly larger firms, CIT Group (CIT) is on the brink of failure. The length and depth of the recession has made many small businesses less credit worthy, and banks are being extremely cautious. This looks like it could be another reason that the labor market is going to stay weak for some time to come. The graph below shows the change in employment levels by firm ...

This is Part 1 of a guest contribution by David Kotok* and Bob Eisenbeis** of Cumberland Advisors. (Part 2 follows tomorrow.)

Note to Readers:  This is the first of a two-part commentary motivated by speeches and editorials from Federal Reserve officials about possible exit strategies from its current quantitative easing policies.  We comment on some problems that the strategies may pose.  We also identify subsidies in the Fed’s current policies.  In part two we comment on the Fed’s own operating policies that may have played an important role in creating the too-big-to-fail problem.  This last issue was overlooked by the Dallas Fed’s Fisher and Rosenblum in their WSJ op-ed piece of September 27, 2009.  They lamented the bottleneck that the concentration of banking resources now creates as the Fed attempts to exit its QE strategy.  They fail to mention how the Fed’s determination of primary-dealer status has

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Ugly, just plain ugly -- that's the best way to describe the September employment report. The economy dropped 263,000 jobs in the month, and 7.2 million now since the start of the recession back in December of 2007. The total number of unemployed rose to 15.1 million, an increase of 7.6 million since the recession began. That brought the unemployment rate up to 9.8%. Silver linings were few and far between in this report. One of the few good news items was that the number of jobs lost in August was revised to 201,000 from 216,000. However, July was revised down to a loss of 304,000 jobs from 276,000. This is the highest unemployment rate since the middle of 1983. Back in the early 1980’s, demographics (Baby Boomers and women entering the labor force) made the natural rate of unemployment much higher than it is today, so ...

Two of the main banking regulators, the OCC and the OTS, jointly released data on mortgage performance in the second quarter today, and the news was not good. The report covers 34 million individual first mortgages totaling about $6 Trillion. All types of delinquencies were up, but most distressing was the information about serious delinquencies, or mortgages that are more than 60 days past due. They reached 5.3% of all mortgages, up from 4.7% in the first quarter, an increase of 11.5%. Foreclosures-in-process reached 2.9% of all mortgages, up from 2.4% in the first quarter -- a 16.2% increase. It didn’t matter which risk category of loan you looked at, delinquencies were going up everywhere. The percentage of prime mortgages that were delinquent rose 10.5% to 3.0%, and are up 13.0% from a year ago. Alt-A delinquencies rose 11.1% from the first quarter to hit 10.3%, and ...