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

To: Crimson Ghost who wrote (35683)	7/10/2005 4:18:33 PM
From: ild	Read Replies (1) \| Respond to of 110194

<<<I cannot recall either the stock or bond market ever trying to discount the end of a Fed tightening cycle so far in advance>>> From SSB research: We wouldn’t get bearish on bank stocks based on curve flattening since bank stocks typically rally at end of Fed tightening, which is usually accompanied by a flatter yield curve (which we’ve shown may be less of an earnings issue than feared). Plus 3-4% div yld are hard to ignore.

To: Crimson Ghost who wrote (35683)	7/10/2005 4:41:07 PM
From: ild	Read Replies (3) \| Respond to of 110194

Message 21490957 <<<A lot will depend on the bond market. If TNX stays under 4% that will tend to keep the housing bubble from deflating too rapidly. But if TNX shoots up to say 5%, then prices will really plunge in the bubble markets I think.>>> FH, why do you watch TNX yield and not other yields? No one in bubble markets finance RE with anything fixed for longer than 5 years. Last year most buyers in Los Angeles were taking 5 year fixed IO mortgages. This year they are taking this "Option ARM" program erate.com It takes little "stated" income to qualify for a mortgage of any size. As the banks have no problems selling their private label MBS the RE financing machine is well oiled. IMO it will take much higher Fed rates to have a meaningful impact on RE.