ajtj99's Market Pulse

[jdaasoc]

Something just smells so foul with the market declining with no corresponding news items to rationalize it.

I am looking at Fannie mae web site data for the possible stench. You just have to pick out the individual snippets out of each month.

http://www.fanniemae.com/ir/pdf/monthly/2006/033106.pdf

ARMs declined from 30.3% to 29.6%. Average loan is $174K.

http://www.fanniemae.com/ir/pdf/monthly/2006/022806.pdf

Mortgage debt outstanding (MDO) grew at 13.8% to 9.8 trillion in 2005. That matchs the rate of growth in 2004 to post the biggest back to back increases in 2 decades.

http://www.fanniemae.com/global/pdf/ir/financial/monthly/2000.pdf

ARMS crossed the 10% of mortgages underwritten point in Apr 2000 just as everyone thought the the market could only go up and it was OK to mortgage the house and invest in the stock market.



It sounds like they are writing a lot of risky loans to first time buyers if interest rates continue to go up.

Foreigners have to buy $60 B in new US debt every month to exchange with the out of balance trade deficit. Fannie mae provides a substancial part of the foreigners purchases.

If Fannie MAe is capped in it's underwriting ability at the $727 B level with this current slap on the wrists, foreigners will be forced to buy more of some other form of asset class with their every expandfing trade deficit dollars.