Slightly OT: Shorting Home Stocks

<p>LOL! I wish we could short PIMCO. We would see the price flying yesterday. Look at it this way when Bill Gross speaks the bond market oes the opposite way and when the maestro speaks the market freaks. I think they are looking for balance or maybe chaos.</p>
 
<p>The homebuilders and the lenders are getting hammered.</p>

<p>STS, a truly fun and volatile real estate bear fund is up almost 4% today. BSC, my favorite short is down 3.5%; CFC, another to despise and celebrate with shorts, is down 3.5%; IMB down 4%, WM and DSL both down.</p>

<p>IR - Everyone is waiting for Bernanke to lower, but I think he is between a rock and a hard place. He tried to talk it up today, and they can mess with the CPI all he wants, but the increase in the money supply is the real inflation and he knows it. The dollar took a dump to 80.66. OUCH! CDOs are falling apart, re is falling, liquidity is showing signs of tightening, spreads are starting to widen. If he lowers, he's screwed. If he raises, he's really screwed.</p>
 
Retail is taking a beating too. But but the consumers took on twice as much debt last month that means they are spending right?
 
I don't know where else to post this but it all started with <a href="http://calculatedrisk.blogspot.com/2007/07/fitch-downgrades-two-second-lien-abs.html">Tanta's post at CR</a>. I started looking into the MBS deals from the article and then I started looking into some more ABS deals. I found a Chernobyl at Bear Stears the 2006-HE7 that closed in August 2006 has a total current deliquency rate of 20% or $100 million. 7% alone is in foreclosure for a total of $35 million. One of the 2/28 pools has a deliquency rate of 27% for $33 million with a 13% rate in foreclosure. The 3/27 pools have mostly foreclosures and REOs at 12% but little 30 day or 60 day lates. I guess they will hang in there until August of 2009 when they can refi. Because you can always refi right?
 
oc - The more we converse here the more I realize we think way too much alike. Make sure you check out my comment on Lansner's blog about the commercial RE. I find it a really sad fact that many are still in fantasyland. I also find it sad that even some bears think I over aggerate things. I guess I should go read "The Secret".
 
Your ability (and willingness) to dig up numbers continues to amaze me. I must confess that I tune-out when I see projections like Voit's because nobody really knows what's going to happen here. Are we getting a recession in the next 12 months? If so, how deep and how long? Will the dollar break below 80 and head for the basement? Will the Yen carry-trade unwind and create another Asian crisis (it's on the move as I type this)? My gut feeling is that non-residential investment is going to get beaten to bloody pulp, it just lags residential by three to five quarters. Rents are likely to follow.
 
<p>LOL I just flipped to CNBC and what are they talking about? The Yen. </p>

<p>I think my willingness to dig up numbers is because I was too young during the last bust to really understand it and the numbers are too much like the last bust. I saw my dad lose his job and drag me to Lincoln Savings to get my money out to prove a point. Like the poor teller had any decision to invest in garbage CDOs. I watched my best friend lose his house because his dad lost his job. What puts it all together is you would think that he would have learned his lesson from that right? But he didn't and now is just like the guy from the brokersoutpost link you provided. I warned him and said look it is going to change are you prepared for it? Blah the lenders will just change with the times and we will be fine is what I heard. Yeah well it's the investors who changed as well as the market. </p>

<p>It may be because my dad did drag me to Lincoln Savings rather than hide the ugly facts that made me dig deeper than most. The Kool-Aid spout comes and goes here but it gets turned on full blast or it shuts off instead of a nice drip. It really is different here as optimism is king and pessimism is looked down upon. I look at it as opportunity and they look at me like I am nuts. I do my best to stay humble but I do have to say I told you so every once in a while.</p>

<p>On the macro level honestly it is beyond me and I know that I will learn from it. I think we are headed for rough patch. On a micro level we are screwed. No one and I mean no one wants to look at who bought homes in the last four years. The RE industry was self feeding itself and they didn't even know it. It's sad because they took down so many others with them. When I worked for the builder every upper end project was at least 25% industry related if not more. Go check the last name Ryan in 92603. Gluttony is a sin and just like the romans if you eat and drink too much you will throw up. Are you going to eat your own vomit?</p>

<p>What is funny is I really am a RE bull but it has gotten out of hand. I have made money in RE and my family has made lots of money in RE. Ironically they are all on the same page as me.</p>
 
<p>Yen is 122.19. Last night whlst we were asleep, it went deep into the 121's. I think the unwind starts at 117 and gets horrendous at 110.</p>
 
Graph & OCF - I realize the book thread is elsewhere, but given your conversation, you might enjoy "<a href="http://www.amazon.com/Clemens-Charles-illustrated-Stephens-Williams/dp/1425565832/">The Gilded Age</a>" by Mark Twain and Charles Dudley Warner, if you haven't read it already.
 
<p>AHM took a big hit today as last night they annouced they see a loss. I had the gut instinct but not the guts to pull the trigger. That and I forgot to keep up with this one. I should have known better since I just looked at their muddy MBS pools.</p>

<p>You guys should watch CALC. If Brightwater in HB doesn't sell well these guys don't have much to work with. </p>

<p>Disclosure: I don't recommend squat and anything you read and act on is all on you. Remember tips are for waiters.</p>
 
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