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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (67810)	8/20/2007 12:42:34 PM
From: Chispas	Read Replies (1) \| Respond to of 116555

"We do know central banks are scared out of their minds" - telegraph.co.uk

To: mishedlo who wrote (67810)	8/20/2007 1:44:26 PM
From: sea_biscuit	Read Replies (2) \| Respond to of 116555

Mish and all: My b-i-l has a 5/1 ARM. Index is 1 yr Trsry bill. Margin is 2.75%. His current rate is 4.75% The ARM adjusts in mid-2009. Now, if it were to adjust right now, the new rate would be ~ 4.5% + 2.75% i.e. 7.25% But my b-i-l is banking on a S-T interest rate cut. He thinks that if Copter Ben cuts by 200 basis pts over the next 2 yrs, 1 yr Trsry rates will track the cuts, and in 2009, his adjusted rate will be 5.25% i.e. LOWER than my 30-year fixed rate! Do you see any flaw in his reasoning? I cannot!