Today's Market News: 2012 off to a risky start?
Will home prices stabilize?
- Duration 3:50
- Date Jan 26, 2012
Will home prices stabilize?
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-- the Dow is up thirty points right now and I'm so thrilled that John Lonsky chief economist of Moody's capital markets -- with this right now.
How -- very good Tracy real Cadbury -- -- into Manhattan traffic well I was stuck at a slow moving subway -- -- the blast happens that is the worst so I'm glad you're here because if anyone can give us the big below the lowdown on what's happening it's you.
Feels different in the already 2011 and it's so volatile anytime you have pick up we moved.
And -- so mostly traders came back this year and I was like okay or excuse -- it happens.
You know at yesterday's FOMC meeting.
The Federal Reserve made it clear that they want the fighting -- markets.
To change the risk switch from off to warrant.
And I wouldn't be surprised.
If the financial markets do is they told moving forward.
Especially yes markets feel more assured.
That the ECB will do what is necessary in order to body Europe more time so risk is back on is what you'll definitely get a look at our this year -- My best -- so but and but is also the notion that the markets presume Q meet some form of QE3 is coming.
It could very well all -- ride you know in the event.
That housing begins to stumble this stock didn't take much to push the Federal Reserve.
It -- -- got huge amounts of outstanding mortgage backed securities for the purpose of movie.
The thirty year mortgage yield down to a range of three they have to 33 quarters percent.
It perhaps sooner the better you know -- about peak spring selling season.
For housing will be upon as quickly enough so perhaps why not announce such a program at the next FOMC meeting of march.
You think that'll happen.
I wouldn't be surprised if it did it wouldn't shock me.
And I think the fact that it wouldn't be surprised.
It would you know tell prospective homebuyers that the Fed is -- everything in its -- To try to stabilize home prices will keep pushing those mortgage yields so low.
Until the housing -- to be such a bargain that you'll move a lot of people out of right team.
-- into the housing market.
But -- again and everyone has sent this -- gonna just bring -- right back to where we started this notion that everybody needs a home.
And rates -- so -- to Begin within people don't wanna buy what you know what else has to -- you have to have a stabilization of the labor market and you've got to convince.
Those households and of the financial wherewithal to afford a down payment up 40% 4530%.
That home prices are not going to deploy -- any further that home price deflation is coming to an end.
So the Fed necessarily have to adopt.
A monetary policy that's good to be very tolerant.
Employment growth that might imply more in terms of wage inflation than otherwise it's still we know we're still not quite at that point.
We're prospective homebuyers are convinced now that home prices are all the bottom.
So and we had bench fed chair Ben Bernanke is leasing that we we're looking at least another two years at least of just nothing.
Right -- well not.
Actually that's -- predicting bright and he try to predict that in order to encourage investors to assume more risk.
So if you wanna go ahead they need to have -- Money you know money market fund earning 0%.
Interest that's your problem but -- -- to.
Encourage investors to go out purchase equities purchase corporate bonds.
Both of which are now perhaps undervalued.
And and doing so provide more financial capital.
Two businesses -- the same time boosting.
Household wealth the us stock price appreciation.