Comments on: Fed Fund Rate Predictions http://www.nakedcapitalism.com/2008/03/fed-fund-rate-predictions.html Mon, 23 Nov 2009 06:07:28 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: dh http://www.nakedcapitalism.com/2008/03/fed-fund-rate-predictions.html#comment-4862 dh Sat, 08 Mar 2008 08:29:00 +0000 http://www.nakedcapitalism.com/2008/03/fed-fund-rate-predictions/#comment-4862 Someday, Ill hit the right keys and proof read, many bows! Ill do better! Someday, Ill hit the right keys and proof read, many bows! Ill do better!

]]> By: doc holiday http://www.nakedcapitalism.com/2008/03/fed-fund-rate-predictions.html#comment-4861 doc holiday Sat, 08 Mar 2008 08:27:00 +0000 http://www.nakedcapitalism.com/2008/03/fed-fund-rate-predictions/#comment-4861 OT, but more background for MCO on ratings growth; I was going back over some MBIA stuff and thought this and ll the ratings trash was work another look?<br/><br/>http://sec.edgar-online.com/2007/03/01/0...<br/><br/>The repackaging of financial assets has had a profound effect on the <br/>fixed-income markets. New patterns of securitization are expected to emerge in <br/>the next decade. Although the bulk of assets securitized in the past five years <br/>have been consumer assets owned by banks, commercial assets - principally <br/>commercial mortgages, term receivables and corporate obligations - are now <br/>increasingly being securitized. Securitization has evolved into a strategic <br/>corporate finance tool in North America, Europe and Japan, and is evolving <br/>elsewhere internationally. Ongoing global development of non-traditional <br/>financial instruments, especially credit derivatives, has accelerated in recent <br/>years. Increasingly complex collateralized debt obligations ("CDO"s) have been <br/>introduced, which should continue to support growth. Moody's has introduced new <br/>services enabling investors to monitor the performance of their investments in <br/>structured finance, covering asset-backed finance, commercial mortgage finance, <br/>residential mortgage finance and credit derivatives. OT, but more background for MCO on ratings growth; I was going back over some MBIA stuff and thought this and ll the ratings trash was work another look?

http://sec.edgar-online.com/2007/03/01/0...

The repackaging of financial assets has had a profound effect on the
fixed-income markets. New patterns of securitization are expected to emerge in
the next decade. Although the bulk of assets securitized in the past five years
have been consumer assets owned by banks, commercial assets – principally
commercial mortgages, term receivables and corporate obligations – are now
increasingly being securitized. Securitization has evolved into a strategic
corporate finance tool in North America, Europe and Japan, and is evolving
elsewhere internationally. Ongoing global development of non-traditional
financial instruments, especially credit derivatives, has accelerated in recent
years. Increasingly complex collateralized debt obligations (”CDO”s) have been
introduced, which should continue to support growth. Moody’s has introduced new
services enabling investors to monitor the performance of their investments in
structured finance, covering asset-backed finance, commercial mortgage finance,
residential mortgage finance and credit derivatives.

]]> By: doc holiday http://www.nakedcapitalism.com/2008/03/fed-fund-rate-predictions.html#comment-4860 doc holiday Sat, 08 Mar 2008 07:45:00 +0000 http://www.nakedcapitalism.com/2008/03/fed-fund-rate-predictions/#comment-4860 oops, I said MCO, but this was S&P, but IMHO, every rating agency out there is involved in providing false and misleading information through model manipulation which fails to reflect risk! If that aint true, then what happened to the last few trillion that just got burned? oops, I said MCO, but this was S&P, but IMHO, every rating agency out there is involved in providing false and misleading information through model manipulation which fails to reflect risk! If that aint true, then what happened to the last few trillion that just got burned?

]]> By: doc holiday http://www.nakedcapitalism.com/2008/03/fed-fund-rate-predictions.html#comment-4859 doc holiday Sat, 08 Mar 2008 07:41:00 +0000 http://www.nakedcapitalism.com/2008/03/fed-fund-rate-predictions/#comment-4859 I found an old post of mine at Yahoo, and wanted to share it; it's from Moody's and it always stood out for me as a nice example of how it seemed that MCO was not ready or able to rate synthetic derivatives, but they wanted the market share and jumped in anyway (IMHO)!<br/><br/>Reporting Standards In The Works The Commercial Mortgage Securities Association, the trade group that represents the CMBS market, launched an initiative through which it will develop reporting standards for CDOs, similar to the Investor Reporting Package standards it developed for the CMBS market several years ago. The CMSA is hoping that the voluntary guidelines will be up and ready to go within in the next 12-18 months, said Kent Born, president of the CMSA. The standards will allow investors to compare bonds across different transactions. With the growth in the CDO market, the CMSA has been having mini-CDO conferences around its twice yearly conventions. The group is also broadening its focus to expand from generic CMBS to all real estate finance, including CDOs and CMBS derivatives. It is also planning to increase its educational sessions on CDOs and the burgeoning credit derivatives market because education on them is a key to the industry’s growth, said Margie Custis, managing director of Principal Global Investors. At a conference earlier this year, Kim Diamond, who heads the CMBS group at Standard & Poor’s, noted that it is tough for the rating agencies to keep pace with CDO technology. She said that the agency is working to adapt its current model to accommodate innovations in the sector andsaid that transparency is the key to all of the CDO models.“We can’t effectively accommodate concentrations right now,” she said. I found an old post of mine at Yahoo, and wanted to share it; it’s from Moody’s and it always stood out for me as a nice example of how it seemed that MCO was not ready or able to rate synthetic derivatives, but they wanted the market share and jumped in anyway (IMHO)!

Reporting Standards In The Works The Commercial Mortgage Securities Association, the trade group that represents the CMBS market, launched an initiative through which it will develop reporting standards for CDOs, similar to the Investor Reporting Package standards it developed for the CMBS market several years ago. The CMSA is hoping that the voluntary guidelines will be up and ready to go within in the next 12-18 months, said Kent Born, president of the CMSA. The standards will allow investors to compare bonds across different transactions. With the growth in the CDO market, the CMSA has been having mini-CDO conferences around its twice yearly conventions. The group is also broadening its focus to expand from generic CMBS to all real estate finance, including CDOs and CMBS derivatives. It is also planning to increase its educational sessions on CDOs and the burgeoning credit derivatives market because education on them is a key to the industry’s growth, said Margie Custis, managing director of Principal Global Investors. At a conference earlier this year, Kim Diamond, who heads the CMBS group at Standard & Poor’s, noted that it is tough for the rating agencies to keep pace with CDO technology. She said that the agency is working to adapt its current model to accommodate innovations in the sector andsaid that transparency is the key to all of the CDO models.“We can’t effectively accommodate concentrations right now,” she said.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/03/fed-fund-rate-predictions.html#comment-4858 Anonymous Sat, 08 Mar 2008 05:04:00 +0000 http://www.nakedcapitalism.com/2008/03/fed-fund-rate-predictions/#comment-4858 Why are interest rates on 30-year fixed-rate mortgages rising even as the Federal Reserve slashes interest rates and yields on Treasury bonds fall?<br/>The answer is that the mortgage market is short of roughly $1 trillion in capital, according to Paul Miller, an analyst at Friedman, Billings, Ramsey.<br/>The modern mortgage market works with lots of leverage, or borrowed money. Investors, including hedge funds and mortgage real estate investment trusts, buy mortgage securities, but finance a lot of their purchases with this leverage.<br/>FBR's Miller estimates that $11 trillion of outstanding U.S. mortgage debt is supported with roughly $587 billion of equity. That's a leverage ratio of 19 to one.<br/><br/>http://www.marketwatch.com/news/story/mortgage-market-needs-1-trillion/story.aspx?guid=359B5377-39DB-4C8B-9178-C45726A45272&dist=SecMostMailed Why are interest rates on 30-year fixed-rate mortgages rising even as the Federal Reserve slashes interest rates and yields on Treasury bonds fall?
The answer is that the mortgage market is short of roughly $1 trillion in capital, according to Paul Miller, an analyst at Friedman, Billings, Ramsey.
The modern mortgage market works with lots of leverage, or borrowed money. Investors, including hedge funds and mortgage real estate investment trusts, buy mortgage securities, but finance a lot of their purchases with this leverage.
FBR’s Miller estimates that $11 trillion of outstanding U.S. mortgage debt is supported with roughly $587 billion of equity. That’s a leverage ratio of 19 to one.

http://www.marketwatch.com/news/story/mortgage-market-needs-1-trillion/story.aspx?guid=359B5377-39DB-4C8B-9178-C45726A45272&dist=SecMostMailed

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