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September is on the Horizon - 08/27
Posted 08-27-2009 at 10:36 AM by dlenski
September is on the Horizon
8/27/09 Mortgage Backed Securities are - 6bp this morning. Stock markets are trading in the red and bond markets are not fairing much better. Fed Governer Lacker says we may not need all 1.25 trillion in MBS purchases moving forward. The Fed has currently purchased over 750 billion in MBS. We find a shift in policy hard to believe as foreclosures are expected to rise. The buyers credit is set to expire in November unless it is extended. There are hints that the credit may be extended and may include all borrowers and not just first time borrowers.
A headline just crossed that the FDIC lost 3.7 billion in bad banks in Q2 and the number of bad banks has risen to 416 from 305. Unemployment is on the rise, bad banks are increasing, there is limited revenue growth, foreclosures are on the rise, and credit is hard to obtain. I think this looks a great deal like last Semptember.
Here are a couple of things I have seen and read. First, www.minyanville.com and John Mauldin "Look at it this way. We’ve dug ourselves into a 12-foot hole over the past 2 years. The data now suggests that we’ve stopped digging, which is always a good idea if you’re in a hole. At some point we’ll have figured out how to add some dirt to the bottom to get us back up to an 8-foot hole. Will we be better off statistically? Absolutely. But we’ll still be in a hole."
The second was from CNBC this morning when a contributor said that he was short the markets. He said that the fundamentals told him to short the markets. He changed his postion and is now buying thinking markets are going up in the short term. He is like a pig being lead to slaughter. His defense was you can not make money shorting when the stock market is going up(true). That sort of thinking is what caused every bubble that has burst. When the technicals say get out, but the greed says stay in.
We hold to our belief that the 30 year fixed will be in the 4.875% to 5.375% range until at least Fall.
www.mortgageserviceswi.com
8/27/09 Mortgage Backed Securities are - 6bp this morning. Stock markets are trading in the red and bond markets are not fairing much better. Fed Governer Lacker says we may not need all 1.25 trillion in MBS purchases moving forward. The Fed has currently purchased over 750 billion in MBS. We find a shift in policy hard to believe as foreclosures are expected to rise. The buyers credit is set to expire in November unless it is extended. There are hints that the credit may be extended and may include all borrowers and not just first time borrowers.
A headline just crossed that the FDIC lost 3.7 billion in bad banks in Q2 and the number of bad banks has risen to 416 from 305. Unemployment is on the rise, bad banks are increasing, there is limited revenue growth, foreclosures are on the rise, and credit is hard to obtain. I think this looks a great deal like last Semptember.
Here are a couple of things I have seen and read. First, www.minyanville.com and John Mauldin "Look at it this way. We’ve dug ourselves into a 12-foot hole over the past 2 years. The data now suggests that we’ve stopped digging, which is always a good idea if you’re in a hole. At some point we’ll have figured out how to add some dirt to the bottom to get us back up to an 8-foot hole. Will we be better off statistically? Absolutely. But we’ll still be in a hole."
The second was from CNBC this morning when a contributor said that he was short the markets. He said that the fundamentals told him to short the markets. He changed his postion and is now buying thinking markets are going up in the short term. He is like a pig being lead to slaughter. His defense was you can not make money shorting when the stock market is going up(true). That sort of thinking is what caused every bubble that has burst. When the technicals say get out, but the greed says stay in.
We hold to our belief that the 30 year fixed will be in the 4.875% to 5.375% range until at least Fall.
www.mortgageserviceswi.com
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