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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (17956)	2/28/2004 6:02:36 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

I think, or perhaps I hope, your assessment of Japanese impact on our long term rates is wrong. You can prove otherwise. My understanding is most of the U.S. debt purchased through the Japanese currency intervention process is no sovereign U.S. debt, but the CMO's put out by Fannie Mae. I am convinced there is something going on in this regard behind the scenes. Greenspan's recent comments suggesting Americans would be better served with ARMs as opposed to fixed rate mortgages suggests to me the possibility that Japan and China are unwilling to accept less yield on CMO debt than they are already. If this were true, and the Fed hopes for another round of home refinancing fueled consumer spending, home owners will need to be herded into adjustable rate mortgages. This is the reason I expect greater returns through foreign currency investments than I do on U.S. Treasury bond gains caused by declining rates. I can't find any plausible reasons for the U.S. Dollar to stop declining, apart from short-term rallies on the way down, particularly is we get to a point where the Fed believes they need greater inflation from imported products to offset internal deflation. I'm prepared to change my portfolio to accommodate a different perspective, but that's the way I see things now.