Askcallie’s Weblog

The 30 year fixed rate is at 6.375% today before adjustments, if any.

Mortgage/Economy news:

Watch for consumer confidence and consumer spending to be the more significant market movers of the week.  Of course, the biggest deal will be the Fed rate decision, which will be released on Wednesday afternoon.  Most economists expect no change in their rate this time.  We feel that is the most likely outcome, particularly because inflation has started to flare.  The complication is in the fact that the economy has not fully rebounded as the Fed had hoped they would by now.  Some people are beginning to talk about stagflation again, but that may be a little premature.  We should see a lot happen in the overall economy over the next six months, especially as we head into the Presidential elections.

Banking and investing are topping the news so far this week.  Citigroup is supposed to start cutting some of the 6500 investment banking jobs this week, according to an inside source.  Many banks have announced and begun thousands of layoffs as the housing slowdown has persisted. 

Last week, many analysts were predicting that Merrill Lynch would downgrade their own earnings forecast.  However, another analyst beat them to it.  Bank of America analyst Hecht lowered projections on Merrill Lynch and UBS from his original expectations for profits to $3.5 billion and $7 billion losses respectively.  Meanwhile, Goldman Sachs downgraded their outlook for the entire financial sector.

Mortgage question: How long must the seller be on title to satisfy the lender? It depends is the real answer. FHA has waived the 90 day guideline because of the large number of foreclosures and Fannie Mae and Freddie Mac never had a seasoning  guideline. Surprised? 

Thought of the day:

The secret of getting ahead is getting started. The secret of getting started is breaking your complex overwhelming tasks into small manageable tasks, and then starting on the first one.

Mark Twain

(Provided by Steve Hale~Georgia Platinum Mortgage)

The 30 year fixed rate is at 6.375% today before adjustments, if any.

Mortgage/Economy news:

Each piece of the three pieces of economic data today was very close to last month’s numbers, and forecasts were pretty accurate as well. 

To start with, weekly jobless claims fell just a little from 386,000 to 381,000.  Because this data comes out weekly, it is the trends and the ranges in which we’re most interested.  The little ups and downs in between don’t mean nearly as much as the news reporters make them out to be.  New claims have been in the mid to high 300K range for months now, which coincides with weak job growth.

The leading economic indicators index went from .0% to .1% in May.  The index measures 10 different aspects of the economy to approximate what the overall economy will do over the next six months.  A positive number suggests growth, but when it is hovering within in a couple tenths of a percentage point of 0, up or down, the signal is not quite as clear.  We would have to say that right now it is basically telling us that there is a 50% chance of a stronger economy by the end of the year.

No matter how poorly the Empire State Index does, the Philadelphia Fed Survey outdoes it almost every time.  The Philly Fed’s manufacturing index fell from 15.6 to 17.1 this month.  The manufacturing sector has been consistently contracting for about the last two years.  So, any manufacturing reports are only likely to have much impact on the markets if they come in much better than forecast, because the financial community already expects bad numbers.

The Federal Reserve, the Treasury Department, and the SEC are all in talks to figure out the investment bank liquidity issue.  In the midst of the Bear Stearns collapse, Bernanke and the Fed had opened up funds to investment firms, money which had previously be reserved just for banks.  The debate is over whether to allow the lending window open only temporarily or make it more permanent.  They also want to put restrictions in place that prevent future lending irresponsibility.  What they decide could be critical in dictating the pace of the economic recovery, not to mention how quickly recovery may begin.

Mortgage Hints: Which is better, Private Mortgage Insurance (PMI) or Lender Paid Mortgage Insurance (LPMI)? LPMI has the private mortgage insurance built into the interest rate. The answer is it depends on the customer’s needs and scenario. If the customer puts 15% down, the PMI solution may be a better fit since they only need 5% in appreciation, reduction of their mortgage or upgrades to the property or a combination of the three to drop PMI. Does that make sense? Call for details.

Thought of the day:

The world is a great mirror.  It reflects back to you what you are.  If you are loving, if you are friendly, if you are helpful, the world will prove loving and friendly and helpful to you.  The world is what you are.

Thomas Dreier

(Provided by Steve Hale~Georgia Platinum Mortgage)

The 30 year fixed rate is at 6.375% today before adjustments, if any.

Mortgage/Economy news:

There is no economic data today, so the stock market is acting on other on financial news, and the bond market is reacting to the stock market. 

FedEx announced that their earnings were likely to fall this year because of oil prices as well as less demand.  Competition and slower business activity have both hurt operations.  It is not so much this individual company’s performance that has traders worried, but it is was it implies about the rest of the economy.  A lot of businesses rely on FedEx, so if FedEx is not making enough money, then presumably many of the businesses who use them are not making enough money either.

The other big company of the day was regional bank Fifth Third Bancorp, who is only expecting 1 to 5 cents earnings per share.  Analysts were betting on 40 cents.  Not only that, the company is cutting its dividend and will attempt to raise $2 billion in capital.  Problems with any financial sector companies seem to be what scares the markets the most right now.

President Bush gave a televised speech this morning urging congress to allow offshore drilling.  He essentially called out the “Democratic-run congress” as he put it, telling them that they need to act before they adjourn for the summer on July 4.  Oil prices have been hovering around $134 per barrel today.  It is long overdue, but the Fed, the government, and even OPEC may finally be working on getting oil and gas prices back down to more “reasonable” levels.

Mortgage hints: With a 700 score, some down payment money and two years of self-employment (1099 is also self employed) we can put your customer into the home of their dreams with a SIVA (Stated Income/Verified Assets) program. Ask  for details.

Thought of the day:

If I wanted to succeed in all things, I would look around me for those who are succeeding, and do as they have done.

Joseph Marshall Wade

(Provided by Steve Hale~Georgia Platinum Mortgage)

The 30 year fixed rates is at 6.375% today before adjustments, if any.

Mortgage/Economy news:

The producer price index (PPI) soared from April’s .2% to 1.4% in May.  The core number was only up .2% as economists forecast.  However, former St. Louis Fed President Poole said in an interview on Bloomberg this morning that the Fed should be focusing on the overall number.  In the past, it had become accepted that the core figure was more representative of reality, because food and energy prices would bounce up and down from month to month.  However, now that oil and food prices have just been rising consistently with little resistance or pull back, Poole says that the Fed has to become concerned with it.  He believes that higher oil prices are “here to stay.”

There was a surprising contradiction to Poole’s comments, although Poole was not specific on what price range he considered “high.”  But, Kuwaiti Finance Minister Mustafa Al-Shimali said that prices are much too high and that they should actually be around $100 per barrel.  Kuwait is OPEC’s fourth largest oil producing nation.  Oil prices reacted this morning, as they retreated to about $133 per barrel.

Housing starts dipped from 1.03 million to 975K last month.  At first thought, it sounds like this is bad news.  However, the construction slowdown began after the housing market started to turn, and building won’t pick up again until the housing market shows clear signs of recovery.  Having fewer new homes on the market is going to be a major part of the rebound, because it will naturally shrink inventory.  That will allow sellers to negotiate better deals and eventually push prices higher again.

Industrial production shrank .2% in May due to weaker manufacturing.  Consumers may also be scaling back on other utility usage in an effort to save money.  Capacity utilization (use of mines and factories) has been steadily falling as well.  It was down from 79.7 to 79.4 last month.

The producer price index (PPI) soared from April’s .2% to 1.4% in May.  The core number was only up .2% as economists forecast.  However, former St. Louis Fed President Poole said in an interview on Bloomberg this morning that the Fed should be focusing on the overall number.  In the past, it had become accepted that the core figure was more representative of reality, because food and energy prices would bounce up and down from month to month.  However, now that oil and food prices have just been rising consistently with little resistance or pull back, Poole says that the Fed has to become concerned with it.  He believes that higher oil prices are “here to stay.”

There was a surprising contradiction to Poole’s comments, although Poole was not specific on what price range he considered “high.”  But, Kuwaiti Finance Minister Mustafa Al-Shimali said that prices are much too high and that they should actually be around $100 per barrel.  Kuwait is OPEC’s fourth largest oil producing nation.  Oil prices reacted this morning, as they retreated to about $133 per barrel.

Housing starts dipped from 1.03 million to 975K last month.  At first thought, it sounds like this is bad news.  However, the construction slowdown began after the housing market started to turn, and building won’t pick up again until the housing market shows clear signs of recovery.  Having fewer new homes on the market is going to be a major part of the rebound, because it will naturally shrink inventory.  That will allow sellers to negotiate better deals and eventually push prices higher again.

Industrial production shrank .2% in May due to weaker manufacturing.  Consumers may also be scaling back on other utility usage in an effort to save money.  Capacity utilization (use of mines and factories) has been steadily falling as well.  It was down from 79.7 to 79.4 last month.

Mortgage thoughts: VA loans are still 100% purchase with 4% Seller Concessions. Are you a veteran?

Thought of the day: (Provided by Steve Hale~Georgia Platinum Mortgage)

Joy is the feeling of grinning inside.

Melba Colgrove

The 30 year fixed rate is at 6.5% today before adjustments, if any.

Mortgage/Economy news:

Manufacturing got a little softer in June in the New York region.  The Empire State Index worsened from -3.2 to -8.6.  New Orders fell, while unfilled orders rose.  Manufacturers seem to slow down their production when they have less business.  Fewer workers may also be adding to difficulties getting work completed, as this has been one of the sectors hard hit by layoffs.

Soaring oil prices have not been kind to manufacturing companies who depend heavily on gas and oil for both production and shipment of their products.  Overnight oil prices came within $0.11 of $140 per barrel.  There was a fire at a drilling rig in the North Sea overnight, which will affect production.  However, many news stations and websites are reporting that the rise in the dollar is having the greater impact.  They may both be contributing a little pressure.  But, the reality is that the dollar remains well below its long-term highs, and close to a three-month low against the euro.  We feel that speculation is the driving force.  Traders are using any excuse they can to buy oil and then everyone else jumps on board for the ride.

Investors are still getting excited at investment firms only losing a few billion dollars.  Lehman just reported that their losses last quarter totaled $2.8 billion.  Doesn’t sound like good news.  Investors’ relief actually comes from the fact that it was around Lehman’s forecast, meaning that the market had already braced for such a number.  Goldman Sachs will announce their earnings later today after the markets are closed.

Mortgage hints: FHA is 100% financing if you use down payment assistance programs like Nehemiah and AmeriDream.

Thought of the day:

To love means loving the unlovable. To forgive means pardoning the unpardonable. Faith means believing the unbelievable. Hope means hoping when everything seems hopeless.

Gilbert K. Chesterton
1874-1936, British Author

(Provided by Steve Hale~Georgia Platinum Mortgage)

The 30 year fixed rate is at 6.5% today before adjustments, if any. Typical adjustments are loan-to-value, credit score, escrow waiver, etc. Now be scared.

Mortgage/Economy news:

The Consumer Price Indexes (CPI) were even with expectations, but they are toward the higher side of where the Fed would like inflation to be on a monthly basis.  Overall CPI rose .6%, mostly attributed to gas prices.  But, core CPI, which excludes food and energy, was up .2%.  Investors were not too worried at these levels though, because the stock markets have been up right from the start of trading.  We could see technical indicators that foretold this rally, meaning that as long as inflation wasn’t too devastating, buyers were reading to buy.  The Dow is up about 120 points, but it does have some resistance on the charts.

More interestingly, the stock markets are holding onto gains following another decline in consumer confidence.  The University of Michigan sentiment survey fell from 57.6 to 56.7.  The same factors as always have been dragging it lower:  high gas prices, slow job growth, and lower consumer spending.

Oil prices have retreated to under $135 per barrel, which might be the reason why stocks and bonds have been able to gain at the same time.  Of course, another reason is probably that they have been losing at the same time, which means that there is a lot of money on the sidelines to be invested in both markets.  Oil prices fall for a day or two every time it looks like demand might start decreasing.  Many airlines are saying they will offer fewer flights, charge small fees for previously included amenities, like free baggage checking or soda on the plane.  Dipping consumer confidence would also lead speculators to believe that people might need to spend less money on gas.

It has been an interesting mix of data and news this morning.  So far, it is working to the advantage of stocks and bonds.  Usually one or the other will take control at some point though.  It is possible that both markets could sell off later in the day as we go into the weekend.  However, if either market makes gains going into closing today, that should carry over to next week.

Thought of the day:

Tenderness and kindness are not signs of weakness and despair, but manifestations of strength and resolutions.

Kahlil Gibran
1883-1931, Lebanese Poet, Novelist

(Provided by Steve Hale~Georgia Platinum Mortgage)

The 30 year fiixed rate is at 6.5% today.

Mortgage/Economy news:

Retail sales numbers showed tremendous resilience in May.  They crushed expectations, with overall sales rising 1.0%.  They were even better excluding autos, up 1.2%.  A rebound in the stock market was already underway, according to the futures markets, prior to the data being released.  Investors must have been expecting strong results.

Since weekly jobless claims rose significantly, from 357K to 384K, the retail sales data is obviously more important to this morning’s traders.  If you recall, the massive sell off in stocks last Friday was a direct result of a huge spike in the unemployment rate.  However, the retail figures imply that businesses are still going to be profitable (perhaps even more profitable with lower payrolls), and therefore their stocks will maintain or grow in value.

Tomorrow’s CPI data, a measure of consumer inflation, has the potential to be just as big as last week’s employment reports.  That is because the Fed has already hinted that they may not be cutting rates anymore, which implies that it is just a matter of time before they start to raise them again.  If the economy is started to recover (as suggested by May’s retail sales), then that obstacle is taken out of their decision.  Then, they will turn their attention to inflation.  It is a catch 22 for bonds though.  If inflation is high, stocks may fall for fear that the Fed will raise their rate, but bonds naturally lose value due to inflation as well.  If inflation is low, stocks will probably rise, but that will push investors to take money out of bonds.  In other words, bond prices are more likely to fall than to rise tomorrow.

Mortgage helpful hints: FHA offers rehad money and non-occupant co-borrower programs.

Thought of the day:

Class is an aura of confidence that is being sure without being cocky. Class has nothing to do with money. Class never runs scared. It is self-discipline and self-knowledge.  It’s the sure-footedness that comes with having proved you can meet life.

Ann Landers

(Provided by Steve Hale~Georgia Platinum Mortgage)

The 30 year fixed rate is at 6.375% before adjustments, if any.

Mortgage/Economy news:

Oil has really replaced the credit and housing markets as the main factor impacting the stock market.  We’ll get to what’s affecting bonds in the Technical Analysis section.  Now, it’s not oil prices directly causing panic in stocks, but rather what they represent.  Investors see oil prices as a leading indicator of inflation right now.  Oil, and we can lump in commodity prices, affects every industrial country in the world, which means that there could be higher global inflation.  This leads to fear that not just the U.S. but all countries may start raising their lending rates.  Higher rates are supposed to lead to slower economic growth, which the U.S. in particular can ill afford.

When the financial markets get “crazy,” as they currently are, there are fewer factors to consider.  One might think it to be the opposite, that there must be so many things going right or wrong (depending on which way the market is going), that it has prompted these insane moves.  In reality, when any markets get as volatile as they have all been (i.e. stocks, bonds, commodities, currencies), it comes from more emotional trading.  When times are good, it is that “irrational exuberance” that Alan Greenspan used to always talk about.  That was his way of saying that there is no logical explanation for what people are doing.  In the case of the current stock and bond market declines, one person panics, and then another, and then another.  Eventually, you’ve got everyone sprinting for the door.

This is not to say that people are not looking at the economic data and other information as well.  But, they are certainly reacting more strongly to it.  For instance, watch the markets right after 8:30 AM ET tomorrow after the retail sales data comes out.  There will probably be a sudden surge in one direction or the other, depending on how the majority of people perceive the data.  Economists are forecasting a pretty good increase.  That would definitely be contradictory to what the markets seem to think at the moment.  Assume that no matter what the numbers are, that the stock and bond markets are going be very volatile again tomorrow.

Thought of the day:

Accept responsibility for your life.  

Know that it is you who will get you where you want to go,

no one else.

(Provided by Steve Hale~Georgia Platinum Mortgage)

The 30 year fixed rate is at 6.375% today before adjustments, if any. Yes……….rates are going up.

Mortgage/Economy news:

Oil has leaked into most economic data, and the trade gap was severely affected in April.  It rose from a revised lower $56.5 billion to $60.9 billion.  It was the highest since March of 2007.  The U.S.’s oil bill hit a record high in April, and as oil has continued rising in May and June, the deficit may very well keep pushing higher.

The trade gap highlights a part of the reason that the futures markets are pricing in a rate hike by the end of this year.  Fed Chairman Ben Bernanke and Boston Fed President Rosengren have both made comments in the past two days about protecting against inflation.  The Fed’s primary weapon against inflation is to raise their overnight lending rate.

Unfortunately, the other expected effect of hiking rates is a slowdown in the economy, which we can ill afford at the moment.  This is why most people believe the Fed will take a break from rate modifications for the next few months.  That will give them a chance to step back and see what their recent policy decisions are really doing, if anything, to help the economy get back in gear.

Thought of the day:

It’s choice – not chance – that determines your destiny.

Jean Nidetch

(Provided by Steve Hale~Georgia Platinum Mortgage)

The 30 year fixed rate is at 6.25% today before adjustments, if any.

Mortgage/Economy news: 

Lehman Brothers announced this morning that they believe they show a $2.8 billion loss in the second quarter.  Therefore, they have set out to raise $6 billion, which they will do through issuance of additional common and preferred stock.  Current shareholders will have mixed feelings.  Although the extra capital will strengthen the company for the future, it also dilutes their current outstanding shares, thereby causing them to lose value in the short-term.  The company has been pretty honest about their soft position, and they have gotten rid of 20% of their mortgage-related and other leveraged loans.  It sends a message to the markets that writedowns have not been exhausted in the lending world yet, but traders will be glad to hear that the company is trying to raise reserves, which is what Fed Chairman Bernanke has recently been urging all financial institutions to do.

The Dow has bounced off its two and a half month low at 12,200.  So far it has made back about 100 of the 400 points it lost on Friday.  Some price retracement is normal after large declines as investors take profits on shorts and look for new bargains.  The Dow needs to get back above 12,400 in order to break the short-term downward trend.

Oil prices have pulled back $3 off Friday’s high, but it is hard to get excited about oil at $136 per barrel.  It could merely be based on some profit taking.  A small increase in the value of the dollar may be assisting with the lower price as well.

Thought of the day:

You are the only problem you will ever have and you are the only solution.

Bob Proctor

(Provided by Steve Hale~Georgia Platinum Mortgage)