Here's a chart on option ARM recasts from a CalculatedRisk article posted last month. I've received several requests to reproduce it with an overlay the S&P 500 — the latest in an email this morning. So here it is.

My tardiness in getting around to this overlay is that, although the apparent correlation is interesting, I doubt it has any major significance.

CalculatedRisk questions the size of the payment shock. As he points out, the Amherst Securities report suggests many payments will double, but other estimates are much lower. Nevertheless, the overlay may suggest some potential headwinds over the next 18 months or so.