Housing Bubble Bursting?

[moh malekpour]

Next Fear: Corporate Debt

Morgan Stanley May Be Next to Write Down Assets

 

[Randolph Kinney]

Does anyone believe this?

U.S. nonfarm productivity jumps

Productivity rises 4.9%, fastest pace in 4 years

Unit labor costs fall 0.2% in third quarter, signaling low wage inflation

WASHINGTON (MarketWatch) - The productivity of the U.S. nonfarm workplace jumped at an annual rate of 4.9% in the third quarter, the fastest growth in four years, the Labor Department reported Wednesday.

Unit labor costs, a key gauge of inflationary pressures from wages, fell at an annual rate of 0.2% in the period from July through September, the lowest in a year.

The productivity and labor-cost figures were much better than expected.

 

[Marcia Langley]

Moh,

It's that corporate debt that keeps making me gasp at the DOW and the bond market.

Investors keep acting like they don't even read. I know many have a strategy for profiting in a steep decline but that does not explain how the market is acting.

Call it fundamentals or call it sentiment but it seems no one believes that stocks and corporate bonds can all crash at the same time.

I don't see much hedging capability for anyone be they individuals, or corporations, or pension plans except for the very most liquid assets.

 

[moh malekpour]

Time to buy? Depends on whom you ask

Time to buy? Depends on whom you ask

 

[Jerry Still]

IndyMac Attack

For whom the bell may toll, next?
http://appraisersforum.com/redirect....com/s/nm/20071106/bs_nm/indymac_results_dc_3

JS

 

[Austin]

I just read that link Moh posted. It is all about prices going up or down. I believe the system is rigged by Realtors and lenders to accommodate their business model. The life of the average mortgage in a normal market is about 7 years. If prices are stable to declining in conjunction with easy financing with 95% ltvr or higher, at the end of seven years there would be no equity build up. If people paid $200,000 for a home and 7 years out can sell it for $225,000 they might pay a $12,000 commission but if at the end of 7 years it is worth $195,000 they ain't going to pay $12,000 out of pocket to a Realtor for commission but they are going to most likely stay put. That is bad for Realtors and lenders. That is why price inflation is built into the model. It is to feed the Realtors, lawyers, courts for recording fees, and lenders etc. Realtors are just trying to stop price declines in their tracts by encouraging people to buy now. That has the effect of freezing the price level numbers.

 

[MARK JOLLIFF]

I'm so confused by the stock market I don't know which way is up! I had some cash in foreign funds and took my decent profits today and am all cash. There is a fund that shorts the S&p 500 that i want to get into but this market keeps hanging in there even though bad news pops up everyday. Shouldn't the market be totally tanking right now? i don't mean down a hundred here or there. I mean TANKING! Some pundits say $100 oil isn't going to effect things and others say recession! So Moh, Randolph don't you guy's think over the next year the market should be down? I do but am having trouble finding the cajones to bet that way!!

 

[Randolph Kinney]

For whom the bell may toll, next?
http://appraisersforum.com/redirect....com/s/nm/20071106/bs_nm/indymac_results_dc_3

JS

He rates IndyMac "underweight," but said its $1.3 billion capital cushion appears sufficient to weather six quarters like the third quarter before regulators become concerned.

Well, the pundits are saying 6 more quarter like this one and it's all over for IndyMac.

The problem is, the ARMs reset all the way to 2011. If they have that many ARMs outstanding, it will add to their woes for a considerable amount of time going forward.

 

[Randolph Kinney]

I'm so confused by the stock market I don't know which way is up! I had some cash in foreign funds and took my decent profits today and am all cash. There is a fund that shorts the S&p 500 that i want to get into but this market keeps hanging in there even though bad news pops up everyday. Shouldn't the market be totally tanking right now? i don't mean down a hundred here or there. I mean TANKING! Some pundits say $100 oil isn't going to effect things and others say recession! So Moh, Randolph don't you guy's think over the next year the market should be down? I do but am having trouble finding the cajones to bet that way!!

Mark,

There is a bubble in the domestic stock market here. Money has been flowing in. The FED has been pumping money to the banks to help relieve the subprime mortgage catastrophe and will continue with additional rate cuts. Other countries are raising their interest rates or are beneficiaries of a weak dollar. That is forcing a flow of dollars to those countries.

Looking at the US Treasury yield curve, from 2 years to 10 year maturity, interest rates have fallen. Look at the FED funds rate at 4.5%, it is higher today than the 10 year note which is at 4.38%, the 2 year note is around 3.5%. It points to another FED rate cut.

The dollar is tanking big time against other currencies with commodity prices rising for gold and oil particularly.

Half cash, half foreign investments until it is clear that FED policy has changed.

You can buy ETFs that will effectively short the major indices. You then have a built in hedge going long foreign, short domestic, holding cash when the dollar interest rates reverse. In that case, sell the foreign investments keeping the short position and let the cash position build.

 

[MARK JOLLIFF]

Mark,

There is a bubble in the domestic stock market here. Money has been flowing in. The FED has been pumping money to the banks to help relieve the subprime mortgage catastrophe and will continue with additional rate cuts. Other countries are raising their interest rates or are beneficiaries of a weak dollar. That is forcing a flow of dollars to those countries.

Looking at the US Treasury yield curve, from 2 years to 10 year maturity, interest rates have fallen. Look at the FED funds rate at 4.5%, it is higher today than the 10 year note which is at 4.38%, the 2 year note is around 3.5%. It points to another FED rate cut.

The dollar is tanking big time against other currencies with commodity prices rising for gold and oil particularly.

Half cash, half foreign investments until it is clear that FED policy has changed.

You can buy ETFs that will effectively short the major indices. You then have a built in hedge going long foreign, short domestic, holding cash when the dollar interest rates reverse. In that case, sell the foreign investments keeping the short position and let the cash position build.

Thanks Randolph for responding. i was half foreign and half cash but I sold the foreign and am all cash. I'm going to short the S&P with about 25% of my money and put 10% in a gold stock and hold cash till things clear up for me. What you say makes perfect sense and I appreciate and respect your opinion. Thanks Mark