Monday, March 17, 2008

Fed tomorrow/Hombuilder Index remains at its lows

Well it turned out to be a surprisingly flat day in the markets. The market seems to be lost and looking for direction as it absorbs the Bear news and all of the new intervention from the Fed. The market is also waiting to hear what the Fed will do tomorrow with the FF rate.

I am starting to believe that the Fed might not give the street all it wants in cuts tomorrow after all the gifts the street got this past week. Think about it, in one week the Fed has set up a $200 billion dollar lending facility, bailed out Bear Stearns, dropped the discount window rate to 3.25% AND allowed the IB's to borrow from it. Wall St. must think its Christmas!!

This is why I think the Fed might only cut .50 instead of the .75 the street wants. The Fed wants to be perceived as being strong and acting in an independent manner and going .50 would send that type of strong message. We know this is a joke and they always pander to Wall St. but they can't always give in.

The Fed also may think they need to slow down a little bit because of what they have done to the dollar and inflation with all of the liquidity they have already thrown into the system. They also may want to save some cuts for down the road. The Fed is running out of bullets. We will see what happens tomorrow.


The NAR released the Hombuilder index for March. This index measures homebuilder sentiment of market conditions. The index came in at depression like 20 in March after hitting an all time low in December at 18. Anything under 50 is considered to be poor market conditions.

So why do I bring this up? BECAUSE THE SPRING SELLING SEASON IS HERE!! The best time of the year to buy a house!!! Now is the time to buy!!! Its getting warm!!! We are almost sold out don't miss your opportunity to get in!!! Anyone hear these before? Gotta love the Realtors. I just found it interesting that at peak season the sentiment remains so bearish among builders. Until tomorrow everyone.

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