There was a nasty press release from Boston Properties late on Friday.
Less than a week after the company said it was nearing a deal to sign a lease for 480,000 square feet in the building at 250 West 55th Street, Boston Properties said it had been unable to come to an agreement on final terms with a major law firm.
The 1-million-square-foot building was to have opened in 2011. Work is currently underway on the foundation.
Things changed in one week? News like this is reflecting in the following charts. As you can see, CMBX spreads are not just widening, they are exploding to the upside.
(click here for a live link, updated daily, of above charts)
Based on the action on Friday’s trading where SRS lost more than 14%, it doesn’t appear that this widening has any effect on CRE stocks. But I always contend that in the end, credit markets get it right. Therefore, it is possible that SRS is on the verge of an explosive move to the upside. The only technical justification for SRS move up is that its BB have contracted significantly in the last 2 months.
[Update - a full one hr after I posted this entry: Treasury plans to back commercial real estate mortgage backed securities in the TALF program. Note that they are talking about AAA rated securities held by banks only. SRS could tank or go up on this news. ]
The comprehensive financial plan to be announced Tuesday by Treasury Secretary Tim Geithner will include an expanded loan facility that will purchase newly issued and newly rated Commercial mortgage-backed securities and private-label mortgage-backed securities, all AAA rated, CNBC has learned.
Also, the calendar is loaded with treasuries auction. FT called it, “the flood gates are open” (link later). It is hard to see a boost for equities in the midst of such a major treasury supply.
Then again, when it comes to reading my tea leaves of treasuries vis-a-vis stocks, I have been wrong in the Nov-Dec period.
Good luck.
i agree…the s*** will hit the fan in credit markets first…there just isn’t nearly the margin for error in the credit world as opposed to the equity world…i believe the cedit world to be a much more logical, serious place….
and, i still think the final panic may hinge on treasury rates expanding considerably (despite fed action) to entice wary overseas investors….at the point treasury rates begin to rise during panic instead of falling…this will be the tell that we (the US) is not going to finance its way out of this with absurdly cheap capital…all rates will move up in lock step with treasuries and a possible confidence crisis in the currency will become much more of a real risk. –are we already seeing the front end of this with the fed buying long treasuries to “force down rates” but the haven’t forced down much from my view? any thoughts? was this buy down by the fed really to cover up the lack of interest in long treasury arena?
I have been waiting for this chance on SRS….Great post!
It’s practically cheap…if you dare to jump in pre-market. (Holding my fair share from a gamble at the close.)
im finishing up my plans for this week. im adding short my Lumber play WFT.TO
why? look at this gappy chart in Lumber Futures. that pathetic rally of the low must be over.
http://www.globeinvestor.com/v5/content/commodities/groups/Softs.html?action=chart&iFSsymbols=LB%20H9
the move down on clean volume and the retrace 50% on no volume.. even days with no buying at all causing limit gaps up. some forestry companies actually rallied on this! …. BIG SELLING OPPORTUNITY in my opinion
founding family members (Ketcham’s) of West Fraser have been selling
http://canadianinsider.com/coReport/allTransactions.php?ticker=wft
what site does everyone use to track insider selling in US Equities? thanks.
http://www.finviz.com/insidertrading.ashx
finviz is great overall
http://www.form4oracle.com/company?cik=0000929887&ticker=apol