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Realistbear

U S Stockmarket Reacts To I R Realities

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http://www.iii.co.uk/news/?type=afxnews&ar...&action=article

FTSE might suffer tomorrow. US market seems to be stalling on IR concerns and flight to safety. 10 year bond has hit a record since 2004 which will have a major impact on the US ARM loans (adjustable mortgages). The bubble markets have financed HPI with ARM loans many of which have been IO loans. Carnage will follow soon and that will probably be the "trigger" for the big real estate sell-off. The UK will follow. IMHO we will see a sharp downturn in house prices this year along with a recession. There are too many wild cards out there to justify continued confidence in the housing market or that there will be a mythical "soft landing":

Wild cards:

Bird Flu

Iran

US IR go beyond 5%

Energy prices working through into the economy to push us into recession

Collapse in consumer confidence (if it isn't already happening)

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I think this is HUGE news.

We all know deep down that it is all about interest rates, and they have been so low throughout the bubble that we don't need a huge rise to do it (ie 4-6% will be a 50% rise and would prob be enough).

At the risk of sounding like a semi retarded mackaw, as this is what I always say :

When interest rates go up by at least 1%

And the sun tells all the dumbasses that they have gone up and there will be a housing crash,

Low and behold there will be a housing crash.

Much as I hate that dumbed down sleasy sensationalist rag, like it or not "it was the sun wot won it"

While I am at it, here is the dumbed down version.

USA today

Running Bear

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I love it when a plan comes together.

today clearly one of those RED days on the markets gold silver bonds equities everything went down down down.

notice it was lehmans who came to the conclusion IR's were going to 5.5% it was clearly that "After dinner speaking that Greenspan did that made up their minds"

Jun06 Eurodollars are trading at 5.14%

why bother with stocks yielding 2-3% when cash gets you 5%? Dow 5000 here we come.....

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I love it when a plan comes together.

today clearly one of those RED days on the markets gold silver bonds equities everything went down down down.

notice it was lehmans who came to the conclusion IR's were going to 5.5% it was clearly that "After dinner speaking that Greenspan did that made up their minds"

Jun06 Eurodollars are trading at 5.14%

why bother with stocks yielding 2-3% when cash gets you 5%? Dow 5000 here we come.....

only if they stop printing $

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with IR's at 5% and the S+P yielding 1.8% selling the stock and gaining interest on the cash is a 320basis point carry trade.

likewise shorting gold and gaining interest on the cash is a 500basis point carry yield. the "gold cartel" will love that one.

who is going to buy money when its that expensive ?

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http://www.iii.co.uk/news/?type=afxnews&ar...&action=article

WASHINGTON (AFX) -- Yields on 10-year Treasury notes climbed again Monday, reaching their highest levels since June 2004, just before the Federal Reserve began raising interest rates.
The price of the benchmark 10-year note fell 14/32 at 98 3/32 with a yield of 4.74%, the highest yield since June 28, 2004, two days before the first rate hike.
Higher bond yields helped to sink U.S. stocks on Monday, traders said. "That's what is putting a cap on the good news in the market," said Peter Cardillo, chief equities strategist at S.W. Bach.
Yields were higher across the maturity curve on Monday. The curve flattened on Monday, but remained inverted. The spread between the yield on the 2-year note and the 30-year bond narrowed to 4 basis points from 9 basis points on Friday. A basis point is one-hundredth of a percentage point.
Typically, longer-term securities would pay more interest than short-dated paper. But in an inverted yield curve, the short end pays more. Such a situation has often preceded economic weakness
.

Perhaps its time to push the awooga button?

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My ill-informed take on this;

The money markets think that the Fed will keep tightening maybe up to 5% maybe more hence yields on T bills have risen today in response pushing up the cost of long term debt. I here that rumours of rising Yen rates have impacted the carry trade, Japan must account for quite a bit of American debt if this is the case. If you take a look at the yield curve on the attached Bloomberg market report the yield curve remains inverted, but a spike has emerged at three years. This could be bad news for the American property market, on top of rising inventories and the much discussed wall of adjusting ARM mortgages. Crikey :ph34r:

Yield curve jumps up

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My ill-informed take on this;

The money markets think that the Fed will keep tightening maybe up to 5% maybe more hence yields on T bills have risen today in response pushing up the cost of long term debt. I here that rumours of rising Yen rates have impacted the carry trade, Japan must account for quite a bit of American debt if this is the case. If you take a look at the yield curve on the attached Bloomberg market report the yield curve remains inverted, but a spike has emerged at three years. This could be bad news for the American property market, on top of rising inventories and the much discussed wall of adjusting ARM mortgages. Crikey :ph34r:

Yield curve jumps up

Right. Al Greenspan warned the markets a year ago that this would happen and that the "froth" markets would feel some pain. Al was referring to the bubble house markets on both coasts. Of course, the Uk is a froth market also and our IR cannot live in a vacuum. With the ECB raising the rates Gordon faces a huge dilemma: raise IR and bring on recession. Not raise and bring on a sterling crisis. Either way he is done. My guess is that he will stand pat and hope things change or he can get into No. 10 before all hell breaks loose.

The US is about to go into recession and when the US catches a cold Europe catches pneumonia.

The Japanese situation is difficult to analyze. Their recovery may stall with the US going into recession leaving them with no alternative other than to leave IR at zero. The Nikkei has been pounded recently due to fears of premature IR hikes.

Looks like the Japs are backing off (fear of recession??):

http://www.iii.co.uk/news/?type=afxnews&ar...&action=article

NEW YORK (AFX) -- The dollar strengthened across the board on Monday, setting a fresh one-week high against the yen, amid diminishing speculation that the Bank of Japan will end its ultra-easy monetary policy this week.
The Japanese currency extended losses, after Japan's Prime Minister Junichiro Koizumi urged the nation's central bank to be prudent in deciding when to tighten monetary policy.
Edited by Realistbear

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with IR's at 5% and the S+P yielding 1.8% selling the stock and gaining interest on the cash is a 320basis point carry trade.

likewise shorting gold and gaining interest on the cash is a 500basis point carry yield. the "gold cartel" will love that one.

who is going to buy money when its that expensive ?

that would be a no brainer if there wasn't any inflation

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BBC News just mentioned that the FTSE might take a knock from worries about rising interest rates in the States - methinks they were using this thread as a script!? :lol:

Big move today--much higher IR looks certain:

http://edition.cnn.com/2006/BUSINESS/03/07...reut/index.html

Europe stocks slip as bonds rise

Tuesday, March 7, 2006 Posted: 0859 GMT (1659 HKT)

Europe

Stock Exchanges

LONDON, England (Reuters) -- European stocks slipped on Tuesday as a jump in bond yields signaled investors expect U.S. interest rates to continue rising, while miners dipped on a fall in commodity prices.

Does not leave the "Miracle Man" much room to lower the rates? TTRTRates and watch the house prices drop further.

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Guest Riser

BBC News just mentioned that the FTSE might take a knock from worries about rising interest rates in the States - methinks they were using this thread as a script!? :lol:

The FTSE might not be the only thing to take a knock Sterling down 0.5% at 1.74

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The FTSE might not be the only thing to take a knock Sterling down 0.5% at 1.74

Hi guys, you are getting me very very nervous, give me some guidance please on my pension (with NU) as I come up to 60.

Done very well moving it around over the past 12 months, up 14.5% and at present in a UK balanced Managed fund 40% / UK commercial property 40% and Far East managed fund 20%.

So do I get in to Bonds and Deposit accounts, or just lock it away in deposit account until the pending storm blows over.

I would like to retire with the fund intact…………….

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nordiclad,

I'd be out of UK commercial yesterday, but then that is me and I would have missed the rise. Mind you the stock market are past masters at pump priming a final spurt in order for the insiders to get out at the top.

I just see UK commerical property as fundamentally massively overvalued, mainly because I see no reason why increasingly global corporations will carry on paying through the nose for it and that is what the rental return is currently based on and as for asset appreciation are the rental returns indicating a significicant revaluation? Don't think so.

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nordiclad,

I'd be out of UK commercial yesterday, but then that is me and I would have missed the rise. Mind you the stock market are past masters at pump priming a final spurt in order for the insiders to get out at the top.

I just see UK commerical property as fundamentally massively overvalued, mainly because I see no reason why increasingly global corporations will carry on paying through the nose for it and that is what the rental return is currently based on and as for asset appreciation are the rental returns indicating a significicant revaluation? Don't think so.

Thanks for the advice, I have to admit all this "inverted-yield-curve and Higher bond yields " etc leave me cold, have no idea what they mean, only that I am trying to look after number one just now. I sold up 18 months ago, waiting for the correction, which must arrive soon. Have to admit following HPC was a factor.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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