BOOM!!!! Feds leave rates the same

[ak1]

Pulled this link off of http://ml-implode.com/

Loan Underwriting changes at OptionOne Mortgage:

http://www.oomc.com/post/_marketing/phaseVII/phase7pg_price.html

The whole list of changes is very interesting especially the following:

“# Florida Condos: Option One will not accept submissions secured by condos in Florida”

If other lenders go the same way Florida Condos could be in significant trouble.

[temeculaguy]

All speculation was against a rate cut, potential rate moves can be played on the market just like a horse can be bet at del mar. The line has been between 12-1 and 8-1 against a rate cut so how can you make the statement that “ALL SPECULATION LEAD PEOPLE TO BELIEVE THAT A RATE CUT WAS COMING?”

I haven’t checked the line for the remaining part of the year but I bet the odds are in favor of no cut for the rest of the year. Don’t buy in to the hype of the media getting excited over a fed meeting, study the fed, the chairman and the members continue to make statements that don’t indicate a cut unless that is what you want to hear. Everything I read from federal reserve members, past and present is that inflation matters more than the stock market. That they think corrections are healthy and are needed to prevent crashes. That credit worthy borrowers still have access to capital and that rates and liquidity shifts are only going to eliminate purchases that shouldn’t be made. The buyers of MBS’s are going through a flight to quality and those market forces are natural and healthy. I see this as the elimination of junk food on the menu and the investors realize they are risk for a heart attack for eating crap, but there’s still plenty of chicken and vegetables on the menu, so eat up becuase bernanke is a health food kinda guy.

The reality is that people with good credit and down payments will still be able to buy houses, the elimination of some buyers will cause prices to decline to historical levels and then all is right with the world, how is this something to be feared? How is this not completely expected? How many times have you read this on these boards?

[temeculaguy]

All speculation was against a rate cut, potential rate moves can be played on the market just like a horse can be bet at del mar. The line has been between 12-1 and 8-1 against a rate cut so how can you make the statement that “ALL SPECULATION LEAD PEOPLE TO BELIEVE THAT A RATE CUT WAS COMING?”

I haven’t checked the line for the remaining part of the year but I bet the odds are in favor of no cut for the rest of the year. Don’t buy in to the hype of the media getting excited over a fed meeting, study the fed, the chairman and the members continue to make statements that don’t indicate a cut unless that is what you want to hear. Everything I read from federal reserve members, past and present is that inflation matters more than the stock market. That they think corrections are healthy and are needed to prevent crashes. That credit worthy borrowers still have access to capital and that rates and liquidity shifts are only going to eliminate purchases that shouldn’t be made. The buyers of MBS’s are going through a flight to quality and those market forces are natural and healthy. I see this as the elimination of junk food on the menu and the investors realize they are risk for a heart attack for eating crap, but there’s still plenty of chicken and vegetables on the menu, so eat up becuase bernanke is a health food kinda guy.

The reality is that people with good credit and down payments will still be able to buy houses, the elimination of some buyers will cause prices to decline to historical levels and then all is right with the world, how is this something to be feared? How is this not completely expected? How many times have you read this on these boards?

[temeculaguy]

All speculation was against a rate cut, potential rate moves can be played on the market just like a horse can be bet at del mar. The line has been between 12-1 and 8-1 against a rate cut so how can you make the statement that “ALL SPECULATION LEAD PEOPLE TO BELIEVE THAT A RATE CUT WAS COMING?”

I haven’t checked the line for the remaining part of the year but I bet the odds are in favor of no cut for the rest of the year. Don’t buy in to the hype of the media getting excited over a fed meeting, study the fed, the chairman and the members continue to make statements that don’t indicate a cut unless that is what you want to hear. Everything I read from federal reserve members, past and present is that inflation matters more than the stock market. That they think corrections are healthy and are needed to prevent crashes. That credit worthy borrowers still have access to capital and that rates and liquidity shifts are only going to eliminate purchases that shouldn’t be made. The buyers of MBS’s are going through a flight to quality and those market forces are natural and healthy. I see this as the elimination of junk food on the menu and the investors realize they are risk for a heart attack for eating crap, but there’s still plenty of chicken and vegetables on the menu, so eat up becuase bernanke is a health food kinda guy.

The reality is that people with good credit and down payments will still be able to buy houses, the elimination of some buyers will cause prices to decline to historical levels and then all is right with the world, how is this something to be feared? How is this not completely expected? How many times have you read this on these boards?

[Anonymous]

The LIBOR (london interbank offered rate) would be almost completely correlated with the change in Fed funds (i.e. what the Fed typically changes with short-term rate manipulations).

LIBOR loans are a private sector equivalent of short term federal funds.

So yes, reducing short term rates would certainly help ARM borrowers.

The 10 year can go in quite different directions and is less constrained by Fed policy.

[Anonymous]

The LIBOR (london interbank offered rate) would be almost completely correlated with the change in Fed funds (i.e. what the Fed typically changes with short-term rate manipulations).

LIBOR loans are a private sector equivalent of short term federal funds.

So yes, reducing short term rates would certainly help ARM borrowers.

The 10 year can go in quite different directions and is less constrained by Fed policy.

[Anonymous]

The LIBOR (london interbank offered rate) would be almost completely correlated with the change in Fed funds (i.e. what the Fed typically changes with short-term rate manipulations).

LIBOR loans are a private sector equivalent of short term federal funds.

So yes, reducing short term rates would certainly help ARM borrowers.

The 10 year can go in quite different directions and is less constrained by Fed policy.

[Coronita]

Long live tech! 🙂 I’m trying to understand the fundamental justification for something like this.

1/2007 Juniper Networks $19.
8/2007 Juniper Networks $34.

Have the fundamentals changed at all in 8 months? Nope. I can’t explain this, except to say that it appears tech is kicking back lately and creating yet another bubble.

[Coronita]

Long live tech! 🙂 I’m trying to understand the fundamental justification for something like this.

1/2007 Juniper Networks $19.
8/2007 Juniper Networks $34.

Have the fundamentals changed at all in 8 months? Nope. I can’t explain this, except to say that it appears tech is kicking back lately and creating yet another bubble.

[Coronita]

Long live tech! 🙂 I’m trying to understand the fundamental justification for something like this.

1/2007 Juniper Networks $19.
8/2007 Juniper Networks $34.

Have the fundamentals changed at all in 8 months? Nope. I can’t explain this, except to say that it appears tech is kicking back lately and creating yet another bubble.

[Chris Scoreboard Johnston]

It is not exactly speculation, there is a hard number that can be derived from the bond yield on a daily basis that tells us the % likelihood of a raise up or decline in rates by the Fed. I do not know the formula off the top of my head, it is not integral to how I trade so I do not care.

If you email CNBC you can probably get how the calculation is figured. Prior to today, I think it was over a 90% probability for a cut before years end. Due to the big gap down close today, that % would be lower now. For those who foresee a huge slowdown, it is an inconsistent position to be against a rate cut. If you get your big recession, you will get cuts to combat it. The Fed is being wise IMO to hold off using their ammo until it is absolutely needed. a 3.5% GDP number like the last one, is nowhere near low enough to get a rate cut right now. The longer they can hold off the more room they buy themselves to stimulate things if they get really weak.

[Chris Scoreboard Johnston]

It is not exactly speculation, there is a hard number that can be derived from the bond yield on a daily basis that tells us the % likelihood of a raise up or decline in rates by the Fed. I do not know the formula off the top of my head, it is not integral to how I trade so I do not care.

If you email CNBC you can probably get how the calculation is figured. Prior to today, I think it was over a 90% probability for a cut before years end. Due to the big gap down close today, that % would be lower now. For those who foresee a huge slowdown, it is an inconsistent position to be against a rate cut. If you get your big recession, you will get cuts to combat it. The Fed is being wise IMO to hold off using their ammo until it is absolutely needed. a 3.5% GDP number like the last one, is nowhere near low enough to get a rate cut right now. The longer they can hold off the more room they buy themselves to stimulate things if they get really weak.

[Chris Scoreboard Johnston]

It is not exactly speculation, there is a hard number that can be derived from the bond yield on a daily basis that tells us the % likelihood of a raise up or decline in rates by the Fed. I do not know the formula off the top of my head, it is not integral to how I trade so I do not care.

If you email CNBC you can probably get how the calculation is figured. Prior to today, I think it was over a 90% probability for a cut before years end. Due to the big gap down close today, that % would be lower now. For those who foresee a huge slowdown, it is an inconsistent position to be against a rate cut. If you get your big recession, you will get cuts to combat it. The Fed is being wise IMO to hold off using their ammo until it is absolutely needed. a 3.5% GDP number like the last one, is nowhere near low enough to get a rate cut right now. The longer they can hold off the more room they buy themselves to stimulate things if they get really weak.

[temeculaguy]

O.K. Chris, you are probably right about the liklihood for the whole year but the odds of a cut on tuesday was between 7% and 12% depending on which day you looked at it, my point was that the op mentioned all the speculation pointing toward a cut that didn’t come. What will happen infuture meetings, that’s harder to tell until the data comes out that precedes the meeting. I agree with you that they will usually wait to pull that lever until they have to because there are only so many bullets in that gun, and what’s the famous line about having limited ammo, wait till you see the whites of their eyes.

[temeculaguy]

O.K. Chris, you are probably right about the liklihood for the whole year but the odds of a cut on tuesday was between 7% and 12% depending on which day you looked at it, my point was that the op mentioned all the speculation pointing toward a cut that didn’t come. What will happen infuture meetings, that’s harder to tell until the data comes out that precedes the meeting. I agree with you that they will usually wait to pull that lever until they have to because there are only so many bullets in that gun, and what’s the famous line about having limited ammo, wait till you see the whites of their eyes.

[Author]

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