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

To: UncleBigs who wrote (54194)	2/18/2006 2:18:32 PM
From: orkrious	Read Replies (2) \| Respond to of 110194

If the long end of the curve stays inverted, look for another refi boom out of arms and into 40 yr. fixed rate mortgages with another cash out bonanza...I think the homebuilders may get another leg higher Not a chance. The bust has started and once it happened nothing is going to reverse it. The advent of 40 year mortgages is going to be no help. Interest only loans have cheaper payments than 40 year loans, and that is where prices are set...at the margin. Further, house prices have started down and inventories are rising. That's going to make it difficult for anyone who wants to go from a 30 year to a 40 year to even close another deal. Down she goes.

To: UncleBigs who wrote (54194)	2/18/2006 4:19:22 PM
From: shades	Respond to of 110194

perception is the Fed is nearing completion, Who believes this? I read lots of economists who do NOT believe this. That the FED has lost control of where interest rates go and our OVERLORDS control that rate now. If they have to keep housing floating however - they can cut rates again like last time - how long has japanese rates been very low? Higher interest rates provide a big increase in interest income for retirees and this fuels a boom in cruises and other discretionary spending for this formerly crimped segment of the population. mosler.org marginal propensity to consume : : A rate hike has a variety of complex impacts. First there is the impact on borrowing/spending for investment by firms and consumption by households. All conventional investments of interest rate elasticity for investment spending are extremely low; less studied is the elasticity for consumer spending but that also appears to be low with the possible exception of housing. Then there are redistribution effects: from debtor to creditor. We used to think a rate hike would have negative effect because creditors might have lower MPC; but as today's creditors are retirees that is likely to be false. A third and important avenue is govt spending: rate hikes increase deficit spending (on interest). If private debt is low; if creditors have high MPC; if govt debt is high; if interest rate elasticities are low; THEN rate hikes can be highly stimulative. Japan is likely in that situation. I also have a technical paper that works through this. : : What do you mean by "MPC?"

To: UncleBigs who wrote (54194)	2/19/2006 4:05:06 AM
From: westpacific	Respond to of 110194

This is my point, we have entered the 3rd Kitchin Third...this is the final cycle since the ramp in 2003. This is a DOWN cycle. Yes there is room up into new highs in the DOW. But we are talking what 800 or so DOW points.......remember with cycle work as we near the final phase markets fall like stone. As we go up into this final cycle, there will be as many stocks creamed as there are rise. In other words - very few will make money. The boyz are distributing hard now. The other point, at anytime it could reverse, on what event I cannot say - but it will be event driven. Short term - 2 months or so, I see chop to even a pullback into the 9900 area. At least as of this weekend that is what I see. As for housing, like I said, 30% of the index new lows, a soft landing - in the months ahead this could become a hard landing. Near term - this is a suckers game. The charts dictate the trade and will update on my blog for any interested as we go. The technicals rule the talk, words are crap - indicators show sentiment. If you do play short, make sure the stock is overbought! Longer term - DOW will see 4000 and the business cycle has not been defeated - no matter how much hype they spin.