Friday, September 09, 2005

Housing Bubble To Get A Boost

The Fed is under pressure, and Wall Street knows it. As I said a few days ago in the post titled Did Katrina Reinflate Housing Bubble?, that hissing sound isn't a leak, it's the bubble getting bigger:

This from Bloomberg:
U.S. stocks rose, pushing the Dow Jones Industrial Average to its best week since May, as oil fell and traders speculated that the Federal Reserve may limit its interest-rate increases in the wake of Hurricane Katrina.

"The reaction in the market has a lot to do with the perception that Katrina is a reason for the Fed to pause its tightening,'' said Janet Engels, director of private client research at brokerage firm RBC Dain Rauscher Corp. in New York. "People definitely want to see when the Fed is going to be done. That has been the big stumbling block for the market.''

— The Boy in the Big Housing Bubble