The Fed has raised rates, officially making real what was mere signaling of the end of its expansionary era... Or is it? You see, from a practical perspective, QE is still in full effect. The US housing market, particularly in large coastal cities is on fire. Commercial and residential rents are rising considerably faster than earnings and incomes. Why is that? Well...

Not only did the Fed go from zero MBS holdings in 2009 to holding about a 5th of the entire nearly $9 trillion dollar MBS market, it still buy tens of billions of dollars of MBS monthly through reinvestment of cash flows back into MBS purchases. This dramatically and synthetically misrepresents the bid for these things. There is no way the Fed will be able to cease these monthly deci-billion dollar purchases without pushing rates up dramatically. If that's true (and it is) then they definitely will have a problem unwinding that $1.8T basket without breaking the real estate market. This is undeniable. In the meantime, we're partying like it's 2007,er.. I mean 2017. There goes that 10 year real estate cycle...