Property Grunt

Thursday, August 16, 2007

Contagion Chatter

The Grunt has some fresh chatter from the wire concerning the credit crunch we are in and it comes straight from infantry serving in the front lines in Wall street.

Absolutely no one knows how this movie is going to end. Anyone who claims they have spoilers on the stock market should be taken with a grain of salt. It is the fact that there is scarce information on how exposed everyone is a core reason causing this volatility. And by the time the credits roll it will be too late.

Anything with the word mortgage is being jettisoned. It doesn't matter what it is attached too. M is the new scarlet letter. Of course this is probably not a big surprise. What is a big surprise is that there are certain players with the liquidity, stronger knowledge base of the market and a John Holmes sized appetite for risk who are cherry picking what is being sold.

The flight to quality is in full effect. Despite what is going on all over the world, there is a significant foreign presence, most likely induced by the weak dollar who are buying American investments. South Americans have become especially fond of the US, which is ironic considering the anti-illegal immigration sentiment that is being bandied about in this country. It could also mean that Manhattan and the rest of New York City might dodge not just a bullet but a whole salvo if enough foreign money is pumped into the real estate market.

As for the late rally that occurred, it appears to be an indication that the players are shifting their money around. In other words it is musical chairs on speed. Or as I would like to call it, passing the hand grenade. The trick is to time it so you are not the one holding it when it goes off.