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

To: Mike Johnston who wrote (48968)	1/7/2006 9:28:21 AM
From: westpacific	Read Replies (2) \| Respond to of 110194

Mike you may be right..... Housing short, no way. There is no doubt the FED sees this as the only way out, the question is what can stop it. Notice how he says anyone whom saves now will be punished BIG TIME. In other words if you do not speculate you will be wiped out. Nice world is it not....... ----- Since mid November, $177.8 billions were added to the M3 money supply (Chart 2). The Fed did the same in May when the market appeared to be in BIG trouble. The Fed increased M3 six weeks in a row for a total of almost $150 billiion. That relentless supply of liquidity changed the course of the market. The Nasdaq went on to gain over 200 points from May to July. This is why we don't fight the Fed. We monitor money supply closely and we trade with the flow. By all means, if the Fed keeps this up, eventually it's going to send us into a hyperinflationary recession. Everyone who saves now will be punished BIG time. But, before that catches up with the Fed's insanity, the market seems to be taking the steroid shots in stride. And, we can not pretend that we don't see what's happening. --- The Nasdaq TRIN Index has dropped from 2.01 on the last trading day of 2005 to 0.50, 0.50, and then 0.39 in the first three trading days of 2006. That to me is pendulum way over swung. Monday and Tuesday gonna be interesting. Either we are in a new upward cycle that could last weeks or this week was just for the Bush roadshow. What a game, trade it or be wiped out. Forget emotion or opinion. West

To: Mike Johnston who wrote (48968)	1/7/2006 9:38:53 AM
From: John Vosilla	Respond to of 110194

"The fact is that house prices on the coasts are 100% overvalued in respect to fundamentals. A 50% decline back to fair value would wipe out millions of "homeowners" and sink a big chunk of financial industry. IMO, by the end of 2008 the Fed will have doubled the money supply by continuing to monetize government spending. This in effect will double the price of everything, while nominal house prices are flat, "saving" many homeowners from default but still wiping out speculators with negative cash flow or those that will not be able to handle rising expenses. Of course there is no "free lunch". The housing market will be saved but the standard of living will collapse for many in the middle class." Exactly. I bet the target nationwide is for 10-20% overall drop but no way such overvalued places like CA can be saved from some kind of severe drop. Who is going to be able to afford to buy that starter home without exotic toxic loans and a fixed rate at say 9% over 30 years that makes your mortgage payment $6034 a month?

To: Mike Johnston who wrote (48968)	1/7/2006 2:10:14 PM
From: kris b	Read Replies (2) \| Respond to of 110194

"IMO, by the end of 2008 the Fed will have doubled the money supply by continuing to monetize government spending" Will additional $ 400B a year (assuming that deficit reaches $ 800B per annum) save an $ 18T housing market? Drop of only 20% will require $ 3.6T in rescue money once all the toxics start defaulting. Only bubble in a new asset class can save the US economy....or hyperinflation. I don't think FED wants to repeat a Weimar Republic. They are not that suicidal. Are they? Kris