Fed Cuts 50 = Crazy Day
Wow, that was quite the roller coaster. Futures showed that 50 basis point cut was expected and that's what happened. Markets spiked, but ended lower. Even XLF (spider that tracks financials) ended lower. If 125bps cut within a few weeks can't prop up financials for more than an hour or so then what can?
The market/addict keeps shooting up on rate cuts but each successive one has a smaller and smaller effect. Do we get the Gates of Hell now?
The market/addict keeps shooting up on rate cuts but each successive one has a smaller and smaller effect. Do we get the Gates of Hell now?
Comments
so sorry, fed doesn't control TNX, and Fed Funds rate has about zero correlation with fixed mortgage rates.
too bad for borrowers. maybe you can get another 2 year ARM?
you musta gotten hold of the good stuff tonight.
The funny thing is (as many a poster here has pointed out) if prices stopped going down right now, when we hit July we will be down about 10% YoY. So you're already wrong.
By the way, over half a trillion dollars in mortgage debt ratings have been or are likely to be cut soon by S&P. Think that might have an effect on debt markets?
I meant from now till next Jan.
<to the waiter> "I'll have what he's having".
On a more serious note, I think a lot of this depends on the recession as to the *degree* of the decline. If we're in a recession (looks like we probably are) then prices will go down *more*. If we're not, then prices may just go down 5% this calendar year.
Already, the inventory is piling on at a good clip. It *looks* like inventory is coming on faster than at this time last year but I've done no analysis on this. This is amazing considering the amount of inventory we already have. I'm wondering if we have a lot of inventory that normally would have come on in Spring. People are trying to "beat the rush" so to speak...
AMZN is +ve now and the market is also rallying. There is too much pessimism out there. Gotta buy when there is fear - cant remain a bear forever. That would be stupid.
Ardell has been showing the current month stats for pending/closed over at RCG. If I am interpreting correctly (In Escrow = Pending) then pendings are up 16%. Closings are a disaster, down +60% (though there is probably and end of month spike). As of the 27th KingCo here are figures (2008 courtesy of Ardell):
Jan-08 In Escrow Closed
SFH 2064 608
Condo 823 204
Total 2887 812
Jan-07 Pending Closed
SFH 1766 1558
Condo 726 635
Total 2492 2193
Diff Pending Closed
SFH 17% -61%
Condo 13% -68%
Total 16% -63%
What's really stupid is to be a bull in a bear market and buying every single dead cat bounce all the while repeating to yourself "I'm buying for the long term." Another thing that's really stupid is assuming that anybody that is bearish now is a bear forever.
It might be kind of stupid as well to front-run a recession by loading up on a retailer with a P/E of 90!!!
I'll pass.
I hope my post did not give the impression that I was calling you or your comment stupid. That wasnt the intent. Just want to make the point that markets do turn and I think that we are close to that time. Being a perma bull or bear is stupid. Ofcourse I know I can be completely wrong. Only time will tell.
All the information about us being in a recession or getting into a recession is common knowledge and baked into the stock price already. Buy when everyone's fearful about the future.
Ah, sounds like you are a "perfect information" adherent. I find that theory a bit suspect, when I see the market going up because it expects a rate cut, then going up because it gets one. Oh, and then a company like Amazon beats it's numbers - then goes down because it doesn't beat them by enough.
bleh
There's a tiny bit of fear out there, but not nearly enough given the seriousness of what is happening.
Check out BW cover - http://www.businessweek.com/magazine
MSM has caught up now. We might be close to bottom.