What is happening?

The world is in flux once again. The US inflation trade is running out of steam as the media is in an all out blitz to heap praise onto Bernanke for his bold action in responding to the subprime problem. Financial executives are all over the media talking about the end of the sub prime credit issue. On that point, I could agree that subprime has largely been accounted for, but the full effect of the subprime issue has yet to pass through the economy. In addition, the next leg in the credit down cycle is about to hit-starting in Oct.-that being Alt-A ARMS. This section of the mtg mkt is just as big and expectations are not built in for the train coming down the track.