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

To: patron_anejo_por_favor who wrote (56665)	3/23/2006 4:48:40 PM
From: UncleBigs	Read Replies (2) \| Respond to of 110194

The one thing that could extend the housing/credit/consumption bubble is lower long term interest rates. It will be important to watch the interest rates as the first weak economic numbers come out in the months ahead. If we have a 3.5% 10 year treasury yield, that will significantly extend the bubble and would probably trigger another massive cash out refi craze. That's another reason why shorting the homebuilders is scary to me. We could see weakness in the fundamentals result in a higher stock price as p/e's expand and the weakness is muted through low rates. Low interest rates didn't help Japan's real estate bubble. However, Americans desire to take on debt for frivolous consumption is beyond belief.