Filed under: Forecasts, Bad news, Housing, Recession

Median home prices fell in two-thirds of American cities in Q1 2008, the National Association of Realtors announced Tuesday.

The median price fell 7.7% to $196,300 in Q1 2008 down from $212,600 for the same period a year ago, the NAR said. It was the largest year-over-year decline since the NAR started keeping comprehensive records of median home prices in 1979.

Median prices declined 12.3% in the West, 7.9% in the Midwest, 7.5% in the South, and 3.32% in the Northeast.

Median prices fell in 100 of 149 U.S. metropolitan areas, rose in 48, and 1 market was unchanged. The largest declines occurred in California: Sacramento, down 29%; Riverside and San Bernardino, each down 28%, and San Diego, 23%. On the positive side was Binghamton, N.Y., which registered the largest increase, up 11.8%, followed by Peoria, Illinois, up 10.4%.

‘Housing market looks stalled’

Economist Peter Dawson did not mince words regarding the U.S. housing sector’s condition, circa spring 2008. “The median price declines are large and show a housing market with an enormous inventory build, a housing market that looks stalled,” Dawson said. “With inventories this high, prices are likely to continue to decline for at least another 3-4 quarters, unless we see a sudden recovery by the U.S. economy, which isn’t likely. It remains a buyers market in most American cities, to say the least.”

Further, the above price decline occurred despite a drop in fixed mortgage rates. The NAR said the national average rate for a 30-year, conventional, fixed-rate mortgage fell to 5.88% in Q1 2008 from 6.23% in Q4 2007; the rate was 6.22% in Q1 2007, the NAR said. However, Dawson was quick to point out that although mortgage rates are lower, year-over-year, lenders’ mortgage requirements are “much more rigorous, for most potential borrowers” compared to a year ago, which “has almost certainly reduced the total number of mortgages approved” — a factor in the current low home sales rate and large inventories.

The NAR said there were about 4.1 million U.S. homes for sale at the end of Q1 2008, about a 9.5- to 10-month supply at current sales rates. A typical/normal market has about a 3-4 month supply of homes for sale.

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Filed under: Deals, The Blackstone Group, Financials and analyticals, Private equity industry, Investments, Value and lack thereof

The Blackstone Group L P (NYSE:BX) has announced the closing of three newly created collateralized loan obligation funds totaling $1.3 billion. Those CLO’s are trading again. These were all created over the past month, and these are just the CLO’s that Blackstone participated in.

In March, Blackstone merged its existing CLO group with the team from its newly acquired GSO Capital Partners. This 35 person CLO team has offices in New York and London. The combined CLO group now manages $14 billion across 26 funds in the US and Europe.

This shows a breakdown in the actual amount per CLO, compares it to Q1 and to 2007, and it even puts the lower volume blame now on the lack of AAA rated part needed for each CLO.

Interestingly enough, Blackstone shares are up almost 50% from their post-IPO lows.

Continue reading the full story and spot analysis at 247WallSt.com.

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Filed under: Television, Marketing and advertising, News Corp’B’ (NWS)

About every 10 seconds or so this season, “American Idol” host Ryan Seacrest or one of the judges brags about how this group of contestants is the most talented in the show’s history. They speak about the huge number of votes being cast and the huge number of song downloads sold on iTunes. Well, as the Associated Press points out, the American people would beg to differ.

“The 21.8 million people who watched last Tuesday’s competition was the show’s smallest Tuesday audience in more than five years,” the AP said. “The show did better the next night, with 22.9 million, but that was the smallest Wednesday audience in three years, according to Nielsen Media Research.”

But Idol fans and shareholders of News Corp. (NYSE: NWS) should not get too down since the show can be saved if producers follow my advice:

1. Fire Paula Abdul - Most of the time she makes no sense which has lead some people to wonder there is more than just Coca-Cola in that red cup in front of her. Perhaps Sharon Osbourne is available. She would make an excellent foil to Simon Cowell.
2. A new catch phrase for Randy Jackson – That “dog” does not hunt any more. The show should hold a contest to develop a new phrase for him to keep repeating.
3. Get Simon Cowell a wardrobe — Is he too cool to care about how he dresses or too cheap to buy nice clothes?
4. Seacrest out – Whatever pact he’s made with Satan has bound to have expired. Why does he need Idol anymore when he’s on every other television show?
5. The sound system – Am I crazy or does the sound on some songs seem much clearer than others?
6. The results show — Producers stretch out 10 minutes of content into a 30-minute show. Either make this program interesting or merge the two shows together.
7. The musical numbers — Why must viewers be tortured by the Idols butchering a pop music classic set to an arrangement that makes them look less hip than cruise ship entertainers? This should be axed.
8. Phone calls -- The idiotic questions from idiotic viewers grind the show to a halt
9. Transparency — It would be nice to know the vote totals for each performer
10. Contestants — Producers used to be good at finding interesting people who can sing. What happened?

Though the viewership is still large, the show has gotten as stale as day-old bread. The final contestants are a mediocre lot at best. David Cook has got rock star hair but has copied many of his memorable song arrangements from others. David Archuletta always looks like he is about to cry as he sings one song just like the other. Syesha Mercado has a pretty voice but she seems more suited to the Broadway stage than the pop charts.

Week after week, voters ditched the talented contestants such as Carly Smithson, and Amanda Overmyer and the ones that showed flashes of promise like Michael Johns. Instead, they let the likes of Jason Castro and Kristy Lee Cook make it to the top 10.

If Americans can’t get this right, how are we going to ever elect a president?

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Filed under: Major movement, Good news, Industry, Valero Energy (VLO), Options, Technical Analysis, Oil

Valero Energy (NYSE: VLO) shares are trading higher along with most other refiners, as crude oil futures have dropped off from last week’s record highs, which could begin to help out refiner’s margins. Also moving VLO is news that a massive California refinery is coming back on line with no significant loss of production after a power outage yesterday morning. If you think that the stock won’t fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on VLO.

After hitting a one-year high of $78.68 in July, the stock hit a one-year low of $44.55 last week. VLO opened this morning at $45.06. So far this day the stock has hit a low of $45.01 and a high of $46.93. As of 12:45, VLO is trading at $46.86, up $2.30 (5.2%). The chart for VLO looks neutral and improving, while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating.

For a bullish hedged play on this stock, I would consider a June bull-put credit spread below the $40 range. A bull-put credit spread is an options position that combines the buy and sale of put options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in just six weeks as long as VLO is above $40 at June expiration. Valero would have to fall by more than 14% before we would start to lose money.

VLO hasn’t been below $40 at all in the past year and has shown support around $45 recently. This trade could be risky if the price of gasoline falls off if demand starts to lower, but even though there is a slowdown in the US, other global economies are still clamoring for energy, which could keep prices high.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in VLO.

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