Downgrade Hits Homebuilders

The Street.com reports:

Homebuilding stocks came under pressure Wednesday after one analyst cut his earnings forecast for the group for 2006 and 2007, citing order drops and other negative housing fundamentals that he says not even the spring selling season can save.

In a research note, Susquehanna Financial Group analyst Stephen East wrote, "We distinctly are not in the camp that the sky is falling -- but it is pretty overcast right now.

We take a somewhat minority position,we think it's possible to for the fed funds target rate to be 6% within 12 months.Some people on Wall Street think the Fed will stop tightening before then.We here at Newsalert aren't convinced.We think the new Fed Chairman has to prove he's a hard ass on inflation and housing speculation.What better way than raising rates until you cause a recession? 7.25% mortgages are coming within 18 months.The only thing we see stopping this prediction is a giant economic slowdown.Non-farm payroll number would have to go negative for several months.