Spreads on CMBS are blowing out again as the commercial real estate market follows residential into the housing decline.
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Moody’s is piling on today with another downgrade of CMBS. The timing of these analysts is impeccable. Although the banks continue to rally on the idea that nationalization is not in the Obama game plan I believe their balance sheets are likely deteriorating just as rapidly as ever. The commerical real estate implosion is only just beginning. Combine the already rapid declines in residential and the declining credit card delinquencies and you have a perfect axis of evil. The bank balance sheets are a disaster. I can’t think of a single good reason to be involved in the sector.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.