Tuesday, November 30, 2010
Quote(s) of the day.
A man begins cutting his wisdom teeth the first time he bites off more than he can chew.
Herb Caen
Honesty is the first chapter in the book of wisdom.
Thomas Jefferson
In seeking wisdom thou art wise; in imagining that thou hast attained it - thou art a fool.
Lord Chesterfield
Some folks are wise and some are otherwise.
Tobias Smollett
Patience is the companion of wisdom.
Saint Augustine
Herb Caen
Honesty is the first chapter in the book of wisdom.
Thomas Jefferson
In seeking wisdom thou art wise; in imagining that thou hast attained it - thou art a fool.
Lord Chesterfield
Some folks are wise and some are otherwise.
Tobias Smollett
Patience is the companion of wisdom.
Saint Augustine
Monday, November 29, 2010
From Ashley McKenzie @ Starkey
Market Comment - Week of November 29th, 2010
Mortgage bond prices closed sharply lower last week driving mortgage rates higher again. We started the week with some flight to quality buying following word that Ireland received a bailout from the EU and the IMF. This spread fears of additional bailouts with talk of Portugal and Spain possibly being next. However, rates shot higher later in the week following two Treasury auctions. Indirect bidders, an indication of foreign demand for US debt, were below average escalating fears that foreign banks might be cooling to our debt. Trading was cut short with the Thanksgiving holiday. Thin conditions Wednesday coupled with numerous data releases resulted in some wild market swings. Overall, the data this week was mixed. For the week, interest rates were worse by about 1/2 of a discount point.Look for the employment data to be released this week to result in mortgage interest rate volatility.
| Economic Factors | |||
| Economic Indicator | Release Date Time | Consensus Estimate | Analysis |
| Consumer Confidence | Tuesday, Nov. 30, 2010 | 52.00 | Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates. |
| ADP Employment | Wednesday, Dec. 1, 2010 | 25k | Important. An indication of employment. Weakness may bring lower rates. |
| Revised Q3 Productivity | Wednesday, Dec.. 1, 2010 | Up 2.2% | Important. A measure of output per hour. Improvement may lead to lower mortgage rates. |
| ISM Index | Wednesday, Dec. 1, 2010 | 56.00 | Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates. |
| Fed "Beige Book" | Wednesday, Dec. 1, 2010 | None | Important. Details current economic conditions across the US. Signs of weakness may lead to lower rates. |
| Employment | Friday, Dec. 3, 2010 | Jobs +150K, Unemp @ 9.7% | Very important. An increase in unemployment or weakness in payrolls may bring lower rates. |
| Factory Orders | Friday, Dec. 3, 2010 | -2.0% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
Factory orders data is a monthly report released by the US Census Bureau. The release is officially referred to as The Advance Report on Durable Goods Manufacturers' Shipments, Inventories, and Orders.
The manufacturing sector is a major component of the economy. Investors use the factory orders report to attempt to determine the direction of the economy in the future. Orders are generally believed to be a precursor to activity in the manufacturing sector because manufacturing typically has an order before considering an increase in production. Conversely, a decrease in orders eventually causes production to scale back; otherwise, the manufacturer accumulates inventories, which must be financed.
Total factory orders break down to approximately 55% durable and 45% non-durable. Durable goods are items such as refrigerators, cars, and aircraft. Non-durables are items such as cigarettes, candy, and soap. The report is often dismissed due to the timing of the release. Durable goods orders are typically reported a week earlier making a portion of the factory orders data "old news." While some analysts dismiss the value of the factory orders data others point out the fact that the report provides a more complete picture than the initial durable goods release. Revisions to initial data along with non-durable figures are factored in providing a more accurate look at the condition of the manufacturing sector.
If the factory orders data shows a significant increase mortgage interest rates could be pressured higher. However, weakness in the data could help rates improve.
The manufacturing sector is a major component of the economy. Investors use the factory orders report to attempt to determine the direction of the economy in the future. Orders are generally believed to be a precursor to activity in the manufacturing sector because manufacturing typically has an order before considering an increase in production. Conversely, a decrease in orders eventually causes production to scale back; otherwise, the manufacturer accumulates inventories, which must be financed.
Total factory orders break down to approximately 55% durable and 45% non-durable. Durable goods are items such as refrigerators, cars, and aircraft. Non-durables are items such as cigarettes, candy, and soap. The report is often dismissed due to the timing of the release. Durable goods orders are typically reported a week earlier making a portion of the factory orders data "old news." While some analysts dismiss the value of the factory orders data others point out the fact that the report provides a more complete picture than the initial durable goods release. Revisions to initial data along with non-durable figures are factored in providing a more accurate look at the condition of the manufacturing sector.
If the factory orders data shows a significant increase mortgage interest rates could be pressured higher. However, weakness in the data could help rates improve.
Quote(s) of the day.
A diplomat is a man who always remembers a woman's birthday but never remembers her age.
Robert Frost
Age is a very high price to pay for maturity.
Tom Stoppard
Age is an issue of mind over matter. If you don't mind, it doesn't matter.
Mark Twain
An archaeologist is the best husband a woman can have. The older she gets the more interested he is in her.
Agatha Christie
Robert Frost
Age is a very high price to pay for maturity.
Tom Stoppard
Age is an issue of mind over matter. If you don't mind, it doesn't matter.
Mark Twain
An archaeologist is the best husband a woman can have. The older she gets the more interested he is in her.
Agatha Christie
Tuesday, November 23, 2010
Quote(s) of the day (Oscar Wilde)
| “It is the confession, not the priest, that gives us absolution” | |||||||||||||||||
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Monday, November 22, 2010
Quote(s) of the day.
God cannot alter the past, though historians can.
Samuel Butler
Historian: an unsuccessful novelist.
H. L. Mencken
History is a vast early warning system.
Norman Cousins
History is a vision of God's creation on the move.
Arnold J. Toynbee
Samuel Butler
Historian: an unsuccessful novelist.
H. L. Mencken
History is a vast early warning system.
Norman Cousins
History is a vision of God's creation on the move.
Arnold J. Toynbee
QE2 Debate Rages On
| Last Week in Review: The debate over Quantitative Easing continued, as did the volatility in the markets. And Bonds and home loan rates sure felt the pinch! Forecast for the Week: It will be a busy week ahead of the Thanksgiving holiday, with more Treasury auctions and a very full calendar of economic reports View: The holiday shopping season is gearing up, but you don't have to be afraid of the crowds, thanks to these easy and inexpensive gift ideas. |
| Last Week in Review  |
 |
| "ACTIONS SPEAK LOUDER THAN WORDS." And this week, we saw a whole lot of loud action in the volatile financial markets..and also heard a lot of words, as the debate over the Fed's latest round of Quantitative Easing continued. Here's what you need to know about what was said....and what happened to home loan rates. If you've been wondering what Quantitative Easing (QE) actually is, it's the concept of the Fed becoming a buyer of Treasuries and Bonds to try and stimulate the economy. The Fed's goal for this latest round of Quantitative Easing (dubbed QE2) is threefold:
 And while the Fed won't come out and say it outright – as they don't want to be accused of currency manipulation – one of the consequences of QE2 is that the US Dollar will weaken. And this helps make US exports more affordable abroad, as well as make imports appear relatively more expensive. In fact, as the image shows, the Dollar has weakened versus the Euro quite significantly since QE2 began. But this will help large multi-national companies, which have a large influence on the economy and the major Stock market indices. And stimulating our economy towards continued growth is the Fed’s main goal for QE2.Yet the debate rages on...even now that QE2 has begun...with respected opinions on both sides as to the wisdom of the Fed's policy. German Finance Minister Wolfgang Schauble went so far as to call current US economic policy "clueless." But supporting the Fed's position were last week's tame inflation readings at both the wholesale and consumer levels, via the Producer Price Index and Consumer Price Index Reports. However, with news last week that Ireland’s banking system is in a dire situation, like Greece's earlier this year, opponents of QE2 point to those countries when they speak to the danger of taking on debt, like the Fed is doing again via QE2. One of the most important things to understand is this: the three goals of QE2, while meant to improve our economy overall and for the long-term, are unfriendly to Bonds and home loan rates. And that was evident last week, as Bond prices and home loan rates ended the week worse than where they began. In fact, last week legendary investor Warren Buffet said, "I think short-term and long-term Bonds are a very poor investment at the present time." If Mr. Buffet thinks long-term Bonds are a poor investment right now, he is saying home loan rates can't come down much further - and the risk in waiting around for that to potentially happen does not outweigh the potential reward. Give me a call if you want to review your situation, or forward this email to a friend, family member or colleague who might benefit. I'm always happy to talk to your referrals, and provide a complimentary consultation. BLACK FRIDAY IS JUST A FEW DAYS AWAY! JUST AFTER THE FORECAST, YOU WON'T WANT TO MISS THE MORTGAGE MARKET GUIDE VIEW ARTICLE, ON FIVE INEXPENSIVE GIFT IDEAS THAT CAN MAKE YOUR HOLIDAY SHOPPING EASY. |
| Forecast for the Week |
| |
| We may have a holiday shortened week ahead, but the markets will be filled with plenty of action. The Treasury will be buying $99 Billion in 2, 5 and 7-Year Notes on Monday, Tuesday and Wednesday. And meanwhile, economic reports for the week begin on Tuesday with the Gross Domestic Product Report, which is the broadest measure of economic activity, and also the Existing Home Sales Report. Also, the "Meeting Minutes" from the Fed’s most recent meeting on November 2-3 will be released. On Wednesday, we'll have a virtual feast of economic reports just ahead of Thanksgiving. We'll get another round of housing news with the New Home Sales Report, plus another read on the economy with the Durable Goods Report, which gives us an update on consumer and business buying behavior on big-ticket items that are designed to last for an extended period of time. Not to be left out, there will be jobs news via the Initial and Continuing Jobless Claims numbers, and inflation news via the Personal Consumption Expenditures (PCE) Index, which happens to be the Fed's favorite gauge of inflation. Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, it's been a volatile few weeks for Bonds and home loan rates as they've been attempting to stabilize. With so many economic reports on tap this week, the volatility will likely continue. If you have any questions about your situation, call or email me anytime! By the way, the financial markets will be closed all day on Thursday in honor of the Thanksgiving holiday, while on Friday the Stock and Bond markets will close early, at 1:00 p.m. ET and 2:00 pm. ET respectively. I wish you and your loved ones a safe, happy, and fun Thanksgiving! |
Friday, November 19, 2010
Quote(s) of the day.
Don't go around saying the world owes you a living. The world owes you nothing. It was here first.
Mark Twain
God writes a lot of comedy... the trouble is, he's stuck with so many bad actors who don't know how to play funny.
Garrison Keillor
Mark Twain
God writes a lot of comedy... the trouble is, he's stuck with so many bad actors who don't know how to play funny.
Garrison Keillor
Market News Via Ashley McKenzie/Starkey Mortgage
The week saw more impact from QE II. For those of you who have been on vacation, QE II stands for the Fed’s second round of ‘quantitative easing’ which is Fed-speak for printing more money. The people who invest their money in bonds (IOU’s that are paid back over time) are concerned that ‘printing money’ will make the dollar worth less in the future. Investors demand a higher return on their IOUs to make up for the money they lost by the dollar being worth less at the time it’s repaid. SO….rates go up. Mortgages are just another type of bond and so this is what happened to them this week. Over the past several weeks we have seen a full ½ percent increase in the 30 year mortgage rate.
Will rates go back down? Most likely not. If there is a melt-down in Europe, traders will run back to the dollar for safety and that will give us a brief drop in rates. But overall the economy does seem to be improving: Jobless claims are the lowest since September 2008 and the Philly Fed Manufacturing Index is telling us that companies are making stuff again. Add to this the fact that the Fed is devaluating the dollar (even though they say that’s NOT their goal) and inflation is almost a sure bet. As I’ve said before, as inflation goes, so go rates.
This week 30 yr. fixed rates ranged between 4.375 & 4.625% depending on program, credit and points. Have a great weekend and have your buyers call us so we can get them approved to buy.
Thursday, November 18, 2010
Quote of the day.
Experience is one thing you can't get for nothing.
Oscar Wilde
Experience is simply the name we give our mistakes.
Oscar Wilde
Oscar Wilde
Experience is simply the name we give our mistakes.
Oscar Wilde
Wednesday, November 17, 2010
Quote(s) of the day.
A joke is a very serious thing.
Winston Churchill
A person without a sense of humor is like a wagon without springs. It's jolted by every pebble on the road.
Henry Ward Beecher
Winston Churchill
A person without a sense of humor is like a wagon without springs. It's jolted by every pebble on the road.
Henry Ward Beecher
Tuesday, November 16, 2010
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