I basically want to scream every time I read an article in which they say interest rates will start rising soon, or there will be three rate increases next year. That is all bullshit and lies.
The FED will not do anything because as I said about a month ago - there is nothing under this market. Housing is down six months in a row now. Materials are causing a false flag that will CRUSH housing if they do anything.
An interesting way to look at this is from the perspective of "price support".
ReplyDeleteThis doesn't mean what you think it means, as in "price supports" being a Socialist scheme to keep markets artificially priced. (Although that actually does happen in the US, as you can see in health care, just as one example.)
"Price support" means support for pricing of a commodity given the trading activity around it, and it's a common term in forex analysis.
What it means is that at a certain price point, trading stops and reverses in the other direction because one side of the trading flow is lopsided.
Given a big enough market for a commodity, you see price support appear as an automatic market mechanism that keeps the market priced at its trading value, which would be the same as its real value if it weren't for that other kind of "price supports".
And that's why forex analysts talk about it relative to the continuous flow of currencies being traded. Crypto isn't big enough yet to have fast and small corrections related to price support, and in particular Bitcoin is so small that it can be whipsawed one direction or another, often with some sticking power.
So your position is essentially like the price support position for forex, but the complicating factor is that there are large organizations engaging in those other kinds of price supports.
There isn't anything under the US housing market because it's been maintained as a bubble with the help of low interest rates. Those rates are so low that they counterbalance and effectively offset entirely the problems related to material shortages within the US.
US housing may be going down finally because of the materials shortages, but US housing would go down by a lot if interest rates were to increase, because there's nothing in the bubble market that would lend any price support for it.
Except that since it is a bubble, anything goes.
If the average individual or family purchaser is in a bind, why not just torpedo the market anyway so that the big institutional players can buy up houses for cheap?
Isn't that the Blackrock strategy?
You're not really willing to win unless you can imagine shelling your own position.
And so the real question is this: are these hints of "increasing interest rates" a kind of wishful advance signaling for the coming wave of institutional buyers?
Are there actually enough rental units in the US?
If there aren't, then there's a kind of price support for this activity they're wishing for right there, and the US Fed may be totally OK with what would otherwise be a kind of economic collusion.
Or fraud, they're pretty OK with fraud too, just as long as the "right people" are involved. :-)
Interesting perspective. Imma have to think on that a bit.
ReplyDeleteBut... full disclosure - I have two mortgages to refi. My money is that they go lower.