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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (19387)	10/4/2004 12:50:51 PM
From: russwinter	Respond to of 110194

The drop in homebuilders actually occurred after bond market recovered from earlier losses. There's no real agency spread widening. Seems a little steep for a broker downgrade. The rest of the mortgage complex, CFC, FNM, XLF, etc, is flat today so no spillover there. Market action is hard to figure, but fractures in the housing bubble complex I think are the key to the whole story. Page 28 of the Kasreil presentation has a chart on mortgage related assets as a % of bank credit over the last half century, it's 60%, getting so that's all they do, loan money on real estate, rather than productive activity. There was this news, but really just a repeat of prior developments. Atlanta Fed Paper:Fannie, Freddie Need Higher Minimum Cap By Dawn Kopecki Of DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- Top economists with the Federal Reserve Bank of Atlanta called for higher minimum capital requirements for Fannie Mae (FNM) and Freddie Mac (FRE), saying Fannie's reported capital holdings are unreliable. The report's authors updated Monday a broader study to take into account accounting problems recently uncovered in an eight-month probe of Fannie's books by the Office of Federal Housing Enterprise Oversight, which regulates Fannie and Freddie's financial stability. "At this time, it's unclear that one can draw reliable conclusions about either the risk profile of Fannie Mae or its capital adequacy using its publicly reported information," the economists said in their update.