If you think the real estate industry is finally on the mend, you better check the data one more time. Now that interest rates are on the rise, home prices will have to drop once again. But prepare your portfolio and you will have nothing to worry about.

Investors better get used to a new theme on Wall Street. As the economy emerges from its defensive shell and money begins to flow to the areas of least resistance, reading and hearing the term “divergence” will be a common occurrence.

Anybody that has ever sat through a basic economics course knows money always heads to the areas that offer the most beneficial risk/reward structure. If two potential investments have the same risk, the choice with the highest return possibility will always be the winner.

The real estate industry is obviously not immune to the phenomenon.

As mortgage rates continue to climb – they’re up almost

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This pair usually moves together.  More good news from the Australian economy has booted the Aussie overnight.  Will gold follow?  Or is Aussie overdone? AUDUSD vs. Gold Daily:

Most of these items can be filed under the heading of "things the market doesn't care about as it races upward, trusting everything will be fine in 6 months" :) Myself, I am fascinated with the dichotomy between the real economy and the stock market economy; I believe in the coming decade the divergence could grow even larger as more money is concentrated in the upper classes of society and less profits are due to the US as each year passes. But to see it so early, is interesting and I think has to do more with the printing fest at the Fed. We'll end this post with a bright spot... if you live in Forth Worth, TX Real economy issues that don't matter to Wall Streeters Credit Crunch Issue #1: GE to Stop Financing Boats, and Motor Homes (ironically 2 things I think are excellent shorts) I went ...