The-Beaker, I suppose you are short mortgage lender stocks ( and maybe financials in general )- according to your postings on the subject. So far - fine ! But this article on CNN is the worst I read about mortgage industry because it is not differentiating between Subprime, Alt-A, prime mortgages...IN fact the author is suggesting the whole mortgage industry is on fire...and this is simply BS !!! We have a situation where banks and mortgage lenders are adjusting their lending practices and what is more important their risk management procedures - and that´s a very good thing to happen ! O.K. it is accompanied with a liquidity crunch because we have the uncommon situation that hedgefunds around the world ( although the term "hedge" might implicate they are kind of masters of risk management ) and other institutionals were forced to reassess their risk exposure, too. We will see some earnings deterioration and job cuts ( in effect it has already begun ! ). It´s now time to quantify what the implications! Will there be a 10 / 15 / 20 % cutback of earnings within banks, investment banks,mortgage lenders and how large is the spil-over effecton consumer spending ? I think the pure "information" that we are in a mortgage industry meltdown is no news at all. It´s time to make some analysis and begin with next phase of the market drawback and undergo some number crunching !
point taken. i think the main point that a lot of people are missing is this. this is systemic infection and personally i only see this as the beginning. the fact that people cannot raise money in the commercial paper market and general refinancing means that funding and cash has dried up. hence fridays rate cut. this will not go away. anyway who believes otherwise has not done the research to really understand what happens in a real credit crunch which this is. it is not a temporary event over a couple of weeks. this will play out over the next few months and well into next year. i think its more of the case that the stock market id generally optimistic in its outlook and traders/investors are assuming the worse is over. i disagree. this has been the result of too much cheap money built up over the last ten years. it does not re liquify in two weeks.