I Don’t Believe in Imaginary Property writes “Scientist Charles Bauschlicher and his research team have found a new way to look for ‘diamonds in the sky’. It might not be romantic, but diamonds shine especially brightly in the 3.4 to 3.5 micron and 6 to 10 micron infrared ranges, which should make NASA’s Spitzer Space Telescope the perfect tool to see them with. Though less common and more monopolized on earth, diamonds are surprisingly common in outer space and the nanometer-sized bits comprise 3% of all the carbon found in meteorites. That means that if meteorite composition is representative of interstellar dust, that dust would contain about 10 quadrillion (1 * 10^16) nanodiamonds per gram.”

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samzenpus writes “With all the scrutiny that Diebold has received in past few years you’d think that they would be more careful but apparently due to a malfunction in some machines, they’ve leaked the results to the 2008 presidential race early. Hopefully this will be the nail in Diebold’s coffin. Surely we’ve another company in this country that can run a sham election better.”

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Filed under: Politics, Housing, Federal Reserve

With home foreclosures expected to increase in 2008 as the second wave of variable interest rate mortgages reset, an influential member of Congress is expected to introduce legislation that would enable the Federal Housing Administration to purchase at-risk loans, enabling them to be refinanced and preventing homeowners from being foreclosed upon, The Financial Times reported Wednesday.

U.S. Congressman Barney Frank, D-Massachusetts and chairman of the House Financial Services Committee, is floating a $15 billion initiative that would authorize the FHA to buy as many as 1 million at-risk mortgages, The FT reported. Some loans, such as those for investment properties and vacation homes, would not be eligible for the program.

The overlooked FHA

Overlooked during the “Roaring 1990s” economic expansion and this decade’s housing boom, the Federal Housing Administration is a Depression-era agency that insures loans made to borrowers with poor credit.

If introduced, Frank’s proposal would be one of several bills circulating in Congress designed to prevent the current housing slump — the nation’s most severe housing slump in more than 20 years — from worsening. To-date, the Bush Administration has steered away from government purchases of classes of loans and favored private initiatives aimed at restructuring them, along with public-based monetary policies designed to improve banks’ cash flow.

Critics: rewards bad choices

Among other criticisms, critics charge that the private sector banks should be able to withstand the big amount of foreclosures and defaults brought on by the housing slump. Rep. Frank disagrees. “You can’t put an end to the economic problems without reducing foreclosures,” Rep. Frank stated, The Wall Street Journal reported Wednesday. (Subscription required.)

Critics also say an FHA program would amount, in many cases, to rewarding people who made bad choices, and/or encourage reckless financial behavior. Economist Steve Affinito disagrees, saying the latter “is a viscous double-standard of the very worst sort.”

“If the critics are concerned about the government rewarding people who made bad choices, then why did the [U.S.] Federal Reserve establish the Term Auction Facility to provide short-term liquidity, which are loans, to banks?” Affinito said. “The banks made bad choices. If the government is against helping entities after they made bad choices, the government should let the banks fail. The answer is obvious enough. The government isn’t against it, and there are positives associated with intervention, so the FHA plan is a legitimate tool.”

Affinito added that there’s solid U.S. Government case precedent for assistance, both to the banking system and to homeowners. In the 1930s, the government created the Home Owners’ Loan Corp. to help borrowers avoid foreclosure, he stated. The post-World War II GI bill for U.S. military service veterans also guaranteed veterans’ first-home mortgages, “which constituted a form of assistance,” Affinito said. The GI bills’ insurance also enabled veterans to secure mortgages at a lower interest rate.

Economists and analysts estimate that by the end of 2009 up to 1.3-1.5 million home mortgage holders might need some form of assistance to avoid foreclosure.

Congress weighing other ideas

Further, along with the Rep. Franks’ FHA proposal, other ideas also are being floated in Congress. The federal Office of Thrift Supervision, a division of the U.S. Treasury, is working on a plan to help borrowers who owe more on their mortgages than their homes are worth, The Journal reported Wednesday. (Subscription required.) In addition, lawmakers are stated to be working on a separate $20 billion bill for allows and loans to say and local government to help to purchase up foreclosed and abandoned homes.

Still, Affinito admits that Rep. Frank and other Democrats will need to compromise and find common ground with those Republicans receptive to the FHA plan; President Bush is also likely to at least voice criticism of the proposal, if not threaten an outright veto, on unnecessary government intervention grounds, Affinito added.

Even so, Rep. Frank is not deterred. “It was the lack of government intervention that got us here,” Rep. Frank said, The Journal reported Wednesday. (Subscription required.)

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Filed under: Politics, Housing, Federal Reserve

With home foreclosures expected to increase in 2008 as the second wave of variable interest rate mortgages reset, an influential member of Congress is expected to introduce legislation that would enable the Federal Housing Administration to purchase at-risk loans, enabling them to be refinanced and preventing homeowners from being foreclosed upon, The Financial Times reported Wednesday.

U.S. Congressman Barney Frank, D-Massachusetts and chairman of the Home Financial Services Committee, is floating a $15 billion initiative that would authorize the FHA to buy as many as 1 million at-risk mortgages, The FT reported. Some loans, such as those for investment properties and vacation homes, wouldn’t be eligible for the program.

The overlooked FHA

Overlooked during the “Roaring 1990s” economic expansion and this decade’s housing boom, the Federal Housing Administration is a Depression-era bureau that insures loans made to borrowers with poor credit.

If introduced, Frank’s proposal would be one of several bills circulating in Congress designed to prevent the current housing slump — the nation’s most severe housing slump in more than 20 years — from worsening. To-date, the Bush Administration has steered away from government buys of classes of loans and favored private initiatives aimed at restructuring them, along with public-based monetary policies designed to improve banks’ cash flow.

Critics: rewards bad choices

Among other criticisms, critics charge that the private sector banks should be able to withstand the massive amount of foreclosures and defaults brought on by the housing slump. Rep. Frank disagrees. “You can’t put an end to the economic problems without reducing foreclosures,” Rep. Frank stated, The Wall Street Journal reported Wednesday. (Subscription required.)

Critics also say an FHA program would amount, in many cases, to rewarding people who made bad choices, and/or encourage reckless financial behavior. Economist Steve Affinito disagrees, saying the latter “is a viscous double-standard of the very worst sort.”

“If the critics are concerned about the government rewarding people who made bad choices, then why did the [U.S.] Federal Reserve establish the Term Auction Facility to provide short-term liquidity, which are loans, to banks?” Affinito said. “The banks made bad choices. If the government is against helping entities after they made bad choices, the government should let the banks fail. The answer is obvious enough. The government isn’t against it, and there are positives associated with intervention, so the FHA plan is a legitimate tool.”

Affinito added that there’s solid U.S. Government case precedent for assistance, both to the banking system and to homeowners. In the 1930s, the government created the Home Owners’ Loan Corp. to help borrowers avoid foreclosure, he stated. The post-World War II GI bill for U.S. military service veterans also guaranteed veterans’ first-home mortgages, “which constituted a form of assistance,” Affinito said. The GI bills’ insurance also enabled veterans to secure mortgages at a lower interest rate.

Economists and analysts estimate that by the end of 2009 up to 1.3-1.5 million home mortgage holders might need some form of assistance to avoid foreclosure.

Congress weighing other ideas

Further, along with the Rep. Franks’ FHA proposal, other ideas also are being floated in Congress. The federal Office of Thrift Supervision, a division of the U.S. Treasury, is working on a plan to help borrowers who owe more on their mortgages than their homes are worth, The Journal reported Wednesday. (Subscription required.) In addition, lawmakers are stated to be working on a separate $20 billion bill for allows and loans to state and local government to help to buy up foreclosed and abandoned homes.

Still, Affinito admits that Rep. Frank and other Democrats will need to compromise and find common ground with those Republicans receptive to the FHA plan; President Bush is also likely to at least voice criticism of the proposal, if not threaten an outright veto, on unnecessary government intervention grounds, Affinito added.

Even so, Rep. Frank is not deterred. “It was the lack of government intervention that got us here,” Rep. Frank said, The Journal reported Wednesday. (Subscription required.)

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Filed under: Private equity, Housing

For hedge funder operator Och-Ziff (NYSE: OZM), it’s been a wild ride since its IPO in November, mostly downhill. The company’s stock price has gone from $32.80 to $20.02.

But this week things have been improving. Och-Ziff announced a fairly good earnings report. For example, the firm posted distributable earnings of $505.5 million, or $1.27 per share. What’s more, assets under management spiked 48% to $33.4 billion.

Yes, with such amounts, it doesn’t take too much work to generate juicy fee income. And Och-Ziff has produced consistent returns. Keep in mind that the firm has an opportunistic approach to investing, which includes exotic strategies and broad global reach.

And yes, the firm thinks that the current market turbulence is presenting some good investment options. Och-Ziff stated it plans to devote 10% of its $20 billion OZ Master Fund to the beaten-down credit market — including even residential mortgages.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar On the web Guide to Decoding Financial Statements. He also operates DealProfiles.com.

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Filed under: Private equity, Housing

For hedge funder operator Och-Ziff (NYSE: OZM), it’s been a wild ride since its IPO in November, mostly downhill. The company’s stock price has gone from $32.80 to $20.02.

But this week things have been improving. Och-Ziff announced a fairly good earnings report. For example, the firm posted distributable earnings of $505.5 million, or $1.27 per share. What’s more, assets under management spiked 48% to $33.4 billion.

Yes, with such amounts, it doesn’t take too much work to generate juicy fee income. And Och-Ziff has produced consistent returns. Keep in mind that the firm has an opportunistic approach to investing, which includes exotic strategies and broad global reach.

And yes, the firm thinks that the current market turbulence is presenting some good investment options. Och-Ziff stated it plans to devote 10% of its $20 billion OZ Master Fund to the beaten-down credit market — including even residential mortgages.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar On the web Guide to Decoding Financial Statements. He also operates DealProfiles.com.

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Filed under: Earnings reports, Forecasts, Toll Brothers (TOL), Housing

Shares of luxury homebuilder Toll Brothers Inc. (NYSE: TOL) are higher in early trading despite posting a decline in its quarterly profit. It looks like the company is still looking for the light at the end of the tunnel as lower sales and increased write-downs resulted in weak earnings results.

During the first quarter, Toll Brothers said it swung to a loss of $96 million, or 61 cents per share as the weak U.S. housing market put a curb on demand and builders were forced to slash home prices. In addition, the company reported that the number of signed contracts for new homes dropped 46% to $573.1 million from the same period last year.

Included in the company’s numbers were pre-tax write-downs of $245.5 million. Excluding that, the largest U.S. luxury home builder’s earnings would have been $57.3 million, or 35 cents per share. Analysts, on average, forecast a quarterly loss of 44 cents a share.

All of the recent recession chatter has accompanied a drop in consumer spending that led to a 23% drop in quarterly sales. Revenue during the first quarter slipped to $842.9 million, down from $1.09 billion in the same period last year. For the quarter, analysts were expecting the company show a revenue of $818 million.

Amid continued fears over a possible recession, with investors showing increased worries over the slumping housing market and credit crunch, Toll is one of the first major home builders to report earnings. Despite its weak earnings figures, analysts at Lehman Brothers are not disappointed and show optimism over the company’s future gains.

Analyst Megan Talbott McGrath initiated coverage on the stock this morning with a “Positive” rating, anticipating improved sales trends in the U.S. homebuilding industry within the next two quarters. Although the broker believes that stocks in the sector will remain volatile as new home sales have not “reached a bottom,” McGrath anticipates that trends will improve by the second half of 2008. She gave an “Overweight” rating to Toll Brothers with a $27 price target.

For now, it looks like McGrath may be correct in her assessment as traders have pushed shares of the stock up 2.74% in early morning trading.

Eliza Popescu is a financial writer for the online investment advisory service Investor’s Observer.

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Filed under: Earnings reports, Forecasts, Toll Brothers (TOL), Housing

Shares of luxury homebuilder Toll Brothers Inc. (NYSE: TOL) are higher in early trading despite posting a decline in its quarterly profit. It looks like the company is still looking for the light at the end of the tunnel as lower sales and increased write-downs resulted in weak earnings results.

During the first quarter, Toll Brothers said it swung to a loss of $96 million, or 61 cents per share as the weak U.S. housing market put a curb on demand and builders were forced to slash home prices. In addition, the company reported that the number of signed contracts for new homes dropped 46% to $573.1 million from the same period last year.

Included in the company’s numbers were pre-tax write-downs of $245.5 million. Excluding that, the largest U.S. luxury home builder’s earnings would have been $57.3 million, or 35 cents per share. Analysts, on average, forecast a quarterly loss of 44 cents a share.

All of the current recession chatter has accompanied a drop in consumer spending that led to a 23% drop in quarterly sales. Revenue during the first quarter slipped to $842.9 million, down from $1.09 billion in the same period last year. For the quarter, analysts were expecting the company show a revenue of $818 million.

Amid continued fears over a possible recession, with investors showing increased worries over the slumping housing market and credit crunch, Toll is one of the first major home builders to report earnings. Despite its weak earnings figures, analysts at Lehman Brothers are not disappointed and show optimism over the company’s future gains.

Analyst Megan Talbott McGrath initiated coverage on the stock this morning with a “Positive” rating, expecting improved sales trends in the U.S. homebuilding industry within the next two quarters. Although the broker believes that stocks in the sector will remain volatile as new home sales have not “reached a bottom,” McGrath expects that trends will improve by the second half of 2008. She gave an “Overweight” rating to Toll Brothers with a $27 price target.

For now, it looks like McGrath may be correct in her assessment as traders have pushed shares of the stock up 2.74% in early morning trading.

Eliza Popescu is a financial writer for the on the web investment advisory service Investor’s Observer.

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Filed under: Bad news, Economic data, Housing, Recession

Sales of new homes fell 2.8% to a seasonally-adjusted annual rate of 588,000 in January 2008, the U.S. Commerce Department announced Wednesday (pdf). Economists surveyed by Bloomberg had expected a seasonally adjusted rate of 600,000.

Meanwhile, the December 2007 seasonally-adjusted total was revised to 605,000.

The median sales price of new houses sold in January 2008 fell 4.3% to $216,000; the average sales price rose 0.7% to $276,600.

In addition, the seasonally-adjusted estimate of new houses for sale at the end of January 2008 was 482,000 — representing a 9.9-month supply at current the current sales rate.

Economist Steve Affinito told BloggingStocks Wednesday the January 2008 new home sales data is in-line with earlier data on existing home sales, indicating that the housing slump is far from over.

“The important numbers in today’s report are the median home price and inventories. The median home price fell over 4% to $216,000 and that indicates considerable market softness, and inventories remain at housing recession levels, nearly 10 months,” Affinito said. “Keep in mind that these stats are occurring while near-record-low mortgage rates are working their way into the system. So it advocates home buyers are reluctant to commit, which is understandable, given the likelihood of future housing price declines.”

Housing lowers U.S. GDP

Further, Affinito stated the housing sector’s slump is likely to continue to subtract from U.S. GDP through at least Q3 2008, and possible well in Q4 2008. Affinito added that he now anticipates the slumping housing sector to lower 2008 U.S. GDP by about 1.0-1.2 percentage points.

“The U.S. economy is diverse and technology-intensive, but housing still plays a significant role because it feeds so many lateral sectors, like appliances, furniture, and home improvement/landscaping,” Affinito stated. “The economy really benefited from housing during the housing boom, and now we’re seeing the reverse effect during the correction.”

As a result, Affinito believes U.S. Q1 growth will register -0.2% to -0.5%, with a similar reading in Q2, adding that an increase in the home foreclosure rate in the second half of 2008 would deepen and prolong the recession.

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Filed under: Products and services, Abercrombie and Fitch (ANF), Limited Brands (LTD)

Abercrombie & Fitch Co. (NYSE: ANF) recently opened Gilly Hicks, a provider of women’s undergarments like no other.

“The shop, which contains upper-end lingerie, loungewear and intimate accessories, is modeled after a British manor, with columns at its doorways, dark wood paneling and close to a dozen rooms, such as a `bra library’ featuring more than 40 styles,” according to the Wall Street Journal (subscription required). The company plans to open as many as 15 other Gilly Hicks outlets this year, the paper stated.

Abercrombie & Fitch continues to walk the fine line between sexy and soft core porn with Gilly Hicks. The promotional video for the chain on its Web features half-naked and at times absolutely naked models of both sexes cavorting on a beach in what appears to be Australia. Gilly Hicks, according to the company’s marketing department, emigrated from England to Australia in 1932 and opened an underwear store in her family’s British colonial-style manor house in Sydney.

This 40-year-old married guy from New Jersey isn’t sure if the message of the commercial is that our underwear is so comfortable that you’ll run around in it in front of total strangers in the beach. Apparently, the models didn’t get the message that prolonged exposure to the sun can damage your skin.

Gilly Hicks, which is the company’s fifth chain, seems like a good fit with the rest of the company’s businesses which are aimed at young people. Plus, the timing seems right as well. Shares of Limited Brands Inc. (NYSE: LTD), parent of Victoria’s Secret, have been clobbered over the past year, tumbling more than 33%. December same store sales fell 8%, twice as much as expected. American Eagle Outfitters Inc. (NYSE: AEO) is counting on its Aerie brand of bras, underwear and robes to keep its sales from eroding further.

Shares of the New Albany, Ohio-based casual retailer have risen about 5% over the past year, a solid performance given the worries among investors about consumer spending. Earlier this month, Abercrombie & Fitch posted a decent 9.4% increase in fourth quarter profit on the performance of its Hollister Co. chain and its children’s apparel business. Wall Street investors were disappointed with the company’s guidance though one analyst is predicting that the stock could jump nearly $30 to $100. That means they’ll pay extra attention to the performance of the Gilly Hicks, something which they probably would have done anyway for reasons having nothing to do with finance.

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