“And more devaluation is coming. Perhaps another 50 percent. The markets are convinced that the Fed is going to drop rates again on Halloween by another half percentage point. This means hyperinflation …”

When Wall Street needs rumors to push the market one way or the other, you know that how splited the views to the future are. Basically, the bulls and bears are in a stalmate, They try to use anything to gain an upper hand. Based on the reactions to the rumors in the last two days, we may conclude that there are probably just a little more bulls than bears, at least for now.

The coming week is going to be exciting, not because of the Halloween, but because we will have FOMC meeting on Wendneday, an Job report Friday. There are also some interesting earning reports as well.

There are some doubts about last Friday\’s rally and the health of the market heading into the new week. The main questions were about the volumn, and hi/lo list on NASDAQ. Also, SEMI is the laggards again, hitting the low that we have not seen since the end of April. So,what will be the implication of the next week.

1) It had gone to the price extreme. Basically if you are not making 200K a year as family, better don’t go there. This situation has tipped the balance and could potentially make the region vulnerable.
2) Despite the extremely high price, income level is not much higher than other high income regions like in CT, NY, MD and VA.
3) High-speed network mobilized economy is actually chipping away at Bay area’s location advantage. Highly paid job can now more easily be moved to less expensive location. This potentially pose a long-term threat to Bay area.

The only two fundamental elements to a housing market is:

1) Current sources of money to allow people to buy. Is it there or not, is it affordable or not?

2) How long the above sources of money can last, 2 more years, 5 more years, or 10 more years before they be taken away.