One reader is interested in Fed policy. "Ok; the housing market is rolling over. I’d like to hear from the minds on this blog if it will continue to do so, and why, if Ben Bernanke stops raising interest rates soon?"

"What if he starts cutting rates towards the end of this year like some are suggesting? Could this MONSTER re-inflate ??"

Others ask about the yield curve. "I’d like to hear some more analysis of the yield curve. People here predicted it would invert, and eventually it did, but it didn’t stay inverted for long. What do people make of the short time it was inverted and its current state?"

And, "It would be interesting to see if the current prolonged flat period was matched by points in earlier cycles when the curve inverted."

Reuters looks at the issue. "Federal Reserve Chairman Ben Bernanke leads his first policy meeting this week, one all but certain to end with another U.S. interest-rate increase and perhaps a suggestion a 21-month run of credit-tightening is almost over. U.S. economic growth is on track for a thumping performance in the quarter of the year. But softer-than-expected new-home sales in February point to weakness in the second half."

"'The Fed definitely wants the economy to slow. What's going on in the housing market now suggests that close to enough may have been done so that the Fed really doesn't have to pound the economy over the head,' said former Fed Governor Lyle Gramley."

"Unfortunately, the Fed's policy statement is about as obfuscatory as the English language will allow. Unless Chairman Ben Bernanke takes the unusual step of spelling out his intentions in clear prose, Wall Street's uncertainty will continue. There are few market-moving economic reports due in the coming week, but there are a few that could prompt investors to change their strategies."

"Home builder Lennar Corp. reports earnings Tuesday morning. After a strong 2005, Lennar's stock has fluctuated widely as investors questioned whether the housing boom is over or not. The stock closed Friday at $59.92, down 13 percent from its 52-week high of $68.86 July 28."

A reader sent in this tip. "Standard & Poor's Ratings Services today revised its outlook on New Century Financial Corp. to negative from stable. 'The outlook revision reflects Standard & Poor's concerns regarding deterioration in profitability metrics that began to emerge in the last two quarters of 2005 as a result of industry-wide developments," said Standard & Poor's credit analyst Anne Cosgrove."

"Like many other subprime mortgage lenders, New Century has seen profit margins erode during late 2004 and 2005, as a flattening yield curve pushed up funding costs while intensifying competition limited New Century's ability to increase interest rates charged on loans originated."

"Standard & Poor's remains concerned about the prospect of asset quality deterioration in 2006, which combined with unpredictable subprime market conditions could further erode profit margins. Standard & Poor's is especially sensitive to the adverse effect rising interest rates might have for the debt service burden of New Century's subprime customers."

"As a result, Standard & Poor's can envision a scenario in which credit costs could rise at the same time the company is struggling to maintain production volumes, preventing any recovery in profitability metrics. If profitability metrics fail to improve and asset quality metrics materially deteriorate, the rating could be lowered."