The main events of this week:

  • The mortgage defaults are spreading to Alt-A (above subprime) market
  • Congress is discussing the bill to make mortgage lenders responsible for borrower’s troubles
  • The NAR is projecting the first nationwide real estate price decline since Great Depression. Depressing?
  • T-Bond rates are up, dollar is down. Last time I recall it happened last May. It means foreign capital is losing interest to move here

What to watch next week:

  • Earnings! Up to Q4-06 everything was milly-wanilly. Will we see any cracks in Q1? I’ll be watching Citibank, Wachovia, Thornburg Mortgage, Wells Fargo, Northern Trust, WaMu, JP Morgan, Motorola, DR Horton, Merrill Lynch and Wilmington Trust – plenty of entertainment all the next week!
  • I expect troubles in mortgage CDO market, but it may take a while before it happens
  • Residential credit default swaps are dead for a while. Now I’ll watch commercial swaps