James Bowen

Stocks began the day with a huge rally, but then the effects of realism set in with a few more disappointing, but not unexpected reports coming out. Currently, most sectors are still showing positive and the market is still up slightly but investors are once again reminded that most indicators are now signalling recession. The one huge report out shows that Gross Domestic Product figures point to the largest reduction since 1980. Consumer spending appeared to be the biggest driver of this figure, with a 3+% decrease in the 3rd Quarter. Going hand in hand with this report is that disposable income is down 8.7%, the largest quarterly drop in over 60 years. Other not so encouraging news is that while weekly unemployment figures did not increase, they did miss the expected figure which was a bit lower than actual numbers, and overall unemployment is sitting at 6.1%. This is another sign of recession and AMEX won't help this situation as they report they will be reducing their workforce by 7000.

The 10 yr Bond is following the same pattern as stocks are today. After a big run up to over 3.96%, it has settled back to the 3.91 range--still up from yesterday's close. Rates are reflecting this yield curve as well, with 30 year fixed rates now running near 6.375%, well above last weeks rates.

THIS IS MY OPINION ONLY AND NOT THAT OF EAGLE NATIONWIDE MORTGAGE CO. ALWAYS CHECK WITH YOUR MORTGAGE PROFESSIONAL REGARDING YOUR TRANSACTION

The market really doesn't have a direction this morning as investors are waiting for the FED to make another cut to the Bank Rate. Other countries have already done it, and this decision is widely anticipated. Will it be the 1/2 point or will the FED leave the door open for another cut in December? This anticipation follows yesterday's furious frenzy that ended with huge gains for stocks and less of an appetite for government safety nets such as the 3 yr treasury which shot up in yield and the 10 yr note which also followed suit. Yield hasn't moved much from yesterdays close , up just one tenth to 3.83%. Rates did jump a bit yesterday, but 6.25% is still available at no buy down cost on the 30 year conventional.This afternoon's announcement may begin the barrage of repricing, and I would not think it would be for the better. Keep your eyes open later today.

In other news hot on the wires is the latest report on manufacturing activity for large tickets. This showed the largest gain in a full quarter, but it was primarily due to the transportation sector. Commercial aircraft orders were up and all those factory incentives on autos paid off for numbers, but profit suffered big on them. So did they actually make out overall, by sacrificing so much on each deal just to sell a unit? Of course the consumer will say yes, so get while the gettin's good I guess. The next big question is, "when will consumer spending begin to buck the trend on staples needed for everday life?"....don't remember the last time I thought of buying a commercial aircraft.

THIS IS MY OPINION ONLY AND NOT THAT OF EAGLE NATIONWIDE MORTGAGE CO. ALWAYS CHECK WITH YOUR MORTGAGE PROFESSIONAL REGARDING YOUR OWN TRANSCATION

Global markets improved overnight apparently in reaction to the actual free up of the 700 Billion for distribution and in hopes of whatever the FED rate cut may be. US markets also opened much higher but have settled back a bit after the CONSUMER CONFIDENCE INDEX indicated the lowest level ever since the statistic was first tracked. HISTORIC! To top it off, home prices once again set record losses. More HISTORY made!

While neither of these reports were real surprises, the CCI's drop was steeper than expected month over month, further endorsing a state of recession. But, it hasn't yet been felt in trading today. Investors must really be looking to act on glimmers of hope from the upcoming Fed Meeting and from announcements from various lenders and corporations who will avail themselves of the BAILOUT BUCKS.

I do hope some of you locked with yesterday's window. Rates began to increase yesterday afternoon before the market sold off and they leveled off. However, pricing is rising again by at least .25 Basis so far this morning as there is less demand for Treasury Notes with the day's sentiment focused on stock gains.

THIS IS MY OPINION ONLY AND NOT THAT OF EAGLE NATIONWIDE MORTGAGE CO. ALWAYS CHECK WITH YOUR MORTGAGE PROFESSIONAL REGARDING YOUR TRANSACTION

Friday's Bond Yield was up a bit driving rates up on Friday as short term's were sought after, but longer terms were being sold to reap any profit after another HISTORIC week on the Street. It seems like each week brings HISTORIC news and this week will feature a widely predicted Fed rate cut down to 1%. Expect more wide swings in anticipation of the Fed action. Longer term treasuries are the early week's expected buys, which should benefit rates, at least until the the Fed announcement. 10 Yr yield fell by a full tenth of a point after Friday's close,and I would think it will open lower this morning. There may be window of opportunity to lock in the next couple days, so keep your eyes out.

In other news, OPEC's production cuts did not stem the decline in oil price trading and it appears for once that OPEC does not really have the ability to control pricing by production cuts. AT LEAST IN THE SHORT TERM!! They have already strongly hinted at announcing another cut when they meet again in December. BUT, it doesn't appear that a cut then would do much to alter prices either, based on the scope of world consumption (especially the US). How's this for a mind blowing figure that is on the Wires this morning...Americans drove 5.6% less, or better yet, 15 BILLION less miles in August 08 than in August 07!!! It was the largest single month drop since stats started. HISTORIC! There's that word again. If consumption remains at these lows the old economic adage of "supply and demand" will resonate loudly. It is amazing though that it took such bleak economic times to get control back over OPEC and over a GAS GUZZLING PLANET. Can it last? That's the next big question. To a large extent, consumers do have control over some big economic factors. This is being seen with every HISTORIC piece of news being reported each week.

THIS IS MY OPINION ONLY AND NOT OF EAGLE NATIONAL BANK. ALWAYS CHECK WITH YOUR MORTGAGE PROFESSIONAL REGARDING YOUR TRANSACTION

Lot's of poor earnings reports all ready out today and expectations of more to come this week and next has now overshadowed the credit crunch as the market driver. A big contributor is Wachovia's 28% drop in profits which is now going to be Wells Fargo's headache. Drugs biggie Merck and Tech king Sun Micro Systems also posted huge losses which will translate to job losses. So it does appear that the recession trend has deepened as most have feared.

Even though this is not such great news, LIBOR had a huge drop overnight which will help the bank to bank lending arena and Treasuries are experiencing continued interest, which drives Yield down, positively affecting mortgage rates. I expect to see a slight improvement in pricing as yield is down .05 at time of this posting.

There is hope folks. Let's all stay positive and focused and we will weather the upcoming earnings storm.

THIS IS MY OPINION ONLY AND NOT THAT OF EAGLE NATIONWIDE MORTGAGE CO.ALWAYS CHECK WITH MORTGAGE PROFESSIONAL REGARDING YOUR TRANSACTION