Most/Least Affordable Cities 2 Buy A HOME

According to the results of a recent nationwide industry analysis of housing markets compiled by Wells Fargo (WFC) and the National Association of Homebuilders, below are Lists of the Top 10 Most and Least Affordable large U.S. Cities to purchase a home. Per the study, large U.S. cities under consideration referred to only those cities with populations larger than 500,000 citizens. Also worth noting, and per the below link, in terms of the calculated 'affordability index' metric, "...To be deemed affordable, a family making the median national income of $64,000 must be able to buy the property and devote no more than 28% of their income toward housing costs."


Top 10 MOST Affordable U.S. Cities:
(Rank -- City -- Affordability Index -- Median Home Price)
1. Indianapolis, Indiana -- 94.8 -- $98,000
2. Youngstown, Ohio -- 94.4 -- $67,000
3. Akron, Ohio -- 93 -- $78,000
4. Grand Rapids, Michigan -- 91.8 -- $97,000
5. Syracuse, New York -- 91.3 -- $85,000
6. Warren, Michigan -- 91.2 -- $119,000
7. Cleveland, Ohio -- 91 -- $86,000
8. Buffalo, New York -- 90.4 -- $90,000
9. Toledo, Ohio -- 90.2 -- $78,000
10. Dayton, Ohio -- 90 -- $85,000


Top 10 LEAST Affordable U.S. Cities:
(Rank -- City -- Affordability Index -- Median Home Price)
1. New York, New York -- 21.5 -- $418,000
2. San Francisco, California -- 32.1 -- $525,000
3. Los Angeles, California -- 42.1 -- $288,000
4. Nassau-Suffolk, New York -- 43 -- $375,000
5. Honolulu, Hawaii -- 44.1 -- $360,000
6. Santa Ana, California -- 48.2 -- $360,000
7. Newark, New Jersey -- 49.3 -- $315,000
8. Miami, Florida -- 49.6 -- $185,000
9. McAllen, Texas -- 50.3 -- $160,000
10. El Paso, Texas -- 52.9 -- $127,000


realestate.yahoo.com/homes-most-affordable-in-2-decades


Data Courtesy: Yahoo Real Estate, NAHB and Wells Fargo

Warren Buffett's 1Q09 Portfolio Shake 'N Bake

During the first quarter of 2009, Warren Buffett's insurance holding company, Berkshire Hathaway (BRKA or BRKB), made the below-listed investment CHANGES to its massive $38 Billion stock portfolio. Per financial statements published by the company along with its 1Q09 earnings report, BRKA continues to hold about $26 Billion in CASH on its balance sheet. Since Berkshire owns roughly $96 Billion in total investment assets, Mr. Buffett is sporting a cash position of 27% relative to his total investments portfolio. Lastly, with specific regard to his 1Q09 portfolio activity, it's interesting to note that Mr. Buffett did not feel the need to add any NEW names (new positions) to his equity portfolio during the three month period in which the S+P 500 index declined by 12%.

INCREASED Stakes:

* Burlington Northern (BNI) stake increased 9.5% to 76,777,029 shares from 70,089,829 shares.

* Johnson & Johnson (JNJ) stake increased 13.6% to 32,508,891 shares from 28,611,591 shares.

* Nalco Holding (NLC) stake increased 3.0% to 9,000,000 shares from 8,739,100 shares.

* US Bancorp (USB) stake increased 2.2% to 69,039,426 shares from 67,551,426 shares.

* Union Pacific (UNP) stake increased 7.3% to 9,558,000 shares from 8,906,000 shares.

* Wells Fargo (WFC) stake increased 4.3% to 302,609,212 shares from 290,244,868 shares.

DECREASED Stakes:

* Carmax (KMX) stake decreased 32.0% to 12,000,000 shares from 17,636,500 shares.

* ConocoPhillips (COP) stake decreased 10.8% to 71,228,096 shares from 79,896,273 shares.

* Constellation Energy (CEG) stake decreased 25.5% to 14,828,207 shares as of March 31 from 19,894,322 shares on December 31. The stake has since decreased to 12,476,154 shares as of May 12.

* UnitedHealth Group (UNH) stake decreased 28.6% to 4,500,000 shares from 6,300,000 shares.

http://www.berkshirehathaway.com/qtrly/1stqtr09.pdf

http://www.cnbc.com/id/30766396//


Data Courtesy: Berkshire Hathaway + CNBC
Full Disclosure: I own shares of COP.

OECD's Top 10 Highest CORPORATE Tax Rates

1. Japan --- 39.54%

2. United States --- 39.25%

3. France - 34.42%

4. Belgium --- 33.99%

5. Canada --- 33.5%

6. Luxembourg --- 30.38%

7. Germany --- 30.18%

8. New Zealand --- 30%

8. Spain --- 30%

8. Australia --- 30%


* OECD's 30 member countries: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovakia, South Korea, Spain, Sweden, Switzerland, Turkey, United Kingdom and the United States


* CNBC data compilation disclosure: "The Organization for Economic Cooperation and Development (OECD) has tracked corporate tax data from its member countries every year since 1981. The tax rates listed here are “combined corporate income tax rates,” a number that includes both national and local levies. It should be noted that the OECD only compiles corporate tax data on its 30 member countries, which do not include the BRIC nations (Brazil, Russia, India, China), as these countries are not currently full members. The lowest OECD Tax rates belong to Ireland (12.5%) and Iceland (15%)."

http://www.cnbc.com/id/30727913

Data Courtesy: CNBC

U.S. Bank Stress Test Assumptions + RESULTS

On Thursday, May 7th, 2009, the U.S Federal Reserve FINALLY unveiled its long-awaited, eagerly-anticipated 'Stress Test' (i.e: the Supervisory Capital Assessment Program) results performed on the country's 19 largest financial institutions. These 19 banks each hold assets of at least $100 Billion and, collectively, are believed to represent about 2/3 of the total assets contained in the entire U.S. Banking system.

Of the 19 U.S. commercial banks tested, 10 banks FAILED and will now need to raise a total of about $75 Billion in additional capital by November of this year. The 3 largest Bank Stress Test LOSERS are: Bank of America/BAC (needs to raise $33.9 Billion in capital), Wells Fargo/WFC (needs to raise $13.7 Billion), and the former wholly-owned financial services arm of General Motors (GM), GMAC/GJM (needs to raise $11.5 Billion).

One of the Treasury's primary litmus tests for the stress tests it conducted revolved around an interesting accounting metric known as Tangible Common Equity or TCE. Tangible Common Equity is designed to indicate how much 'ownership equity' owners of common stock would actually receive in the event of a company's forced liquidation. According to Wikinvest, TCE intends to remove the more subjective components of valuation (intangible assets and goodwill) from the calculation of a company's underlying worth. The accounting formula for the TCE ratio is a company's Total Shareholders Equity MINUS its Intangible Assets (non-physical assets on a company's balance sheet - exp's include: intellectual property, brand recognition), Goodwill (the premium paid by an acquiring company over and above the acquired company's Tangible Book Value) and Preferred Stock as a percentage of Tangible Assets. During the stress tests, the U.S. government made it clear that it strongly urges all 19 commercial banks to maintain a TCE of at least 4% moving forward.


Due to uncertainty regarding the future macroeconomic environment, the Federal Reserve tested the TCE of each of the 19 banks under 2 different economic scenarios - 1.) 'Average Baseline' and 2.) 'Alternative More Adverse'. Per the above chart, the more optimistic 'Average Baseline' case carried the following assumptions for 2009: -2% GDP 'growth', 8.4% unemployment and a 14% decrease in nationwide housing prices. Meanwhile, the 2009 assumptions used by the more pessimistic 'Alternative More Adverse' view were: -3.3% GDP 'growth', 8.9% unemployment and a 22% decline in housing values.


Lastly, it should most certainly be noted that the April's U.S. jobs/payrolls report was released this past Friday and the country's unemployment rate currently stands at 8.9% - already exactly matching the more pessimistic unemployment assumption used in the 'Alternative More Adverse' scenario. According to Dean Baker of the American Prospect, a healthier or more realistic assumption for the country's unemployment rate in 2009 would be 9.4%. It should also be noted that per the above S+P Case/Schiller nationwide 10 city housing prices index graph, the current real decline in 2009 housing prices has also ALREADY virtually matched the housing assumption used in the 'Alternative More Adverse' scenario. Furthermore, most 'experts' believe housing prices will continue to decline in 2009 and probably finish the year down by about 24-25%. As a result and anecdotally thinking, it looks like the assumptions used by the Federal Reserve in their 'Average Baseline' scenario are entirely too optimistic (14% decline in housing??) and disingenuous at best. Meanwhile, the assumptions employed in the 'Alternative More Adverse' scenario don't seem to be pessimistic enough unless the U.S. economy rebounds sometime during the 2nd half of 2009.


marketwatch.com/news/story/Stress-tests-see-possible-600/

http://www.wikinvest.com/metric/Tangible_Common_Equity_(TCE)

prospect.org/csnc/blogs/name=background_on_the_stress_tests


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BANK Stress Test RESULTS - Scorecard :


10 Banks That FAILED (Ticker) - Capital Needed :
* Bank Of America (BAC) - $33.9 Billion
* Wells Fargo (WFC) - $13.7 Billion
* GMAC (GJM) - $11.5 Billion
* Citigroup (C) - $5.5 Billion
* Regions Financial (RF) - $2.5 Billion
* Suntrust Financial (STI) - $2.2 Billion
* Morgan Stanley (MS) - $1.8 Billion
* Keycorp (KEY) - $1.8 Billion
* Fifth Third Financial (FITB) - $1.1 Billion
* PNC Financial (PNC) - $0.6 Billion

9 Banks That PASSED (Ticker):
* Goldman Sachs (GS)
* JP Morgan (JPM)
* US Bancorp (USB)
* Metlife (MET)
* American Express (AXP)
* Bank Of New York Mellon (BK)
* State Street (STT)
* Capital One Financial (COF)
* BB&T Corp (BBT)


http://www.cnbc.com/id/30626465/


Data Courtesy: Marketwatch, CNBC + The American Prospect
Full Disclosure: I own shares of GS.

ECRI Signals The END Of The U.S. Recession

According to the Economic Cycle Research Institute (ECRI) and their proprietary group of leading economic indicators, the END of the grueling U.S. recession that officially began back in December 2007 is FINALLY within sight. Over the last 75 years, economic growth rate cycle upturns during EVERY recession have been followed zero to 4 months later by the actual END of the recession itself.

In TheStreet.com article referenced below, Anirvan Banerji, the director of research for the globally-renowned ECRI, writes that both the U.S. Long Leading Index (USLLI) and the U.S. Weekly Leading Index (WLI) have now been in cyclical upturns for the past 4 months. The growth rate for the USLLI turned up (and has since sustained this trend) in November 2008 while the growth rate for the WLI followed shortly and began its turnaround in December 2008. Along with the rest of ECRI's leading indices, these intriguing developments indicate a business cycle recovery THIS year, and probably by the end of the SUMMER.

Lastly, it should be properly noted that ECRI's leading economic indices correctly predicted the ongoing housing/debt bubble recession. ECRI's Weekly Leading Index (WLI) initially turned negative back in early June 2007, and eventually plunged in December 2007 to levels that had not been seen since the 2001 tech/dot com bubble recession.


thestreet.com/10495033/1/banerji-the-end-of-the-recession.html


Data Courtesy: ECRI + TheStreet.com