In this week’s continuation, we look back at Mortgage Backed Securities, and what they’re become.
Mortgage Backed Securities/Collateralized Debt Obligations (CDO/CLO) are big complex ideas - but are simple when broken down. These "American Life" broadcasts discuss how money is made off of bad investments and when prices go down. And the article below discusses the CLO market as of June 2018... to quote their summary:
"As of June 30, the S&P/LSTA Index imputed default rate was 1.28%, the highest level in 2018 but still very close to the levels last seen in November 2007."
All while the housing sector of CLO's sees a decline, and the spreads are very reminiscent of Nov/Oct 2007. In short, if CLO's are any indicator, a market retraction on the order of 2008 may not make it to the 2020 that experts are predicting.
A look at the 2008 CDO market: https://www.thisamericanlife.org/355/the-giant-pool-of-money
1 year later, a look at the CDO market: https://www.thisamericanlife.org/…/return-to-the-giant-pool…
A 2018 look at the CDO market: https://www.tcw.com/…/Monthly_Commenta…/07-10-18_Loan_Review
The NYC market is currently softening, with trends similar to 2009: https://www.cnbc.com/…/nyc-real-estate-becomes-a-buyers-mar…