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Larry Bailey

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Tue, Dec 02 - 9:36 AM ET

12-02-08
Larry Bailey
Gas prices have now dropped 77 consecutive days to bring the average price for a regular gallon of gas across the US to $1.82. 8:49 AM ET - GE says it plans to maintain dividend in 2009. 8:27 AM ET - Futures show stocks mounting a comeback after yesterday's carnage as the S&P 500 lost nearly 9%, a drop that used to take years to occur. The Dow lost 7.7% wiping out last weeks gains. Mortgage Bonds down after the roller coaster ride yesterday. Oil better by 25 cents at $49.50/barrel. GE expects 4th quarter earnings at the low end.
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It's Official -_ The USA hit a recession on December 2007 - Now what??

12-01-08
Larry Bailey

Mon, Dec 01 - 1:06 PM ET
The National Bureau of Economic Research said today the US entered into a recesion in December of 2007. The Dow off 450 points. MBS still in positive territory.

12:38 PM ET - New data shows 10 Yr T Note yield the lowest since 1955.

11:47 AM ET - The Dow falls 400 points halting a 5 day advance. Concerns regarding the global economic slump is deepening and consumers access to credit shrinks. The fall was exasperated by a weak manufacturing report released today. Oil falls below $50/barrel at $49.75.

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Market Update

12-01-08
Larry Bailey

Current Price of FNMA 6% Bond: $101.88, +3bp

After rocketing higher last week, Stocks are under selling pressure and this has helped Mortgage Bonds modestly improve.

The Institute of Supply Management will be reported at 10am. The market may not have much reaction to this release - but stay tuned.

At 1:45pm ET today, Federal Reserve Chairman Ben Bernanke is speaking on the economic outlook at a Dallas Fed conference, Treasury Secretary Henry Paulson is due to give an update on the US economy and our good friend Richard "Loose Lips" Fisher is also scheduled to talk. Mr. Bernanke's speech could be very interesting as he has a chance to hint about further rate cuts - especially with the next Fed Meeting on December 16th. There are rumors swirling the Fed will take the Fed Funds Rate down to zero. But we think a move to .50% is more likely. The current Fed Funds Rate stands at 1%.

Black Friday kicked off the holiday shopping season and the National Retail Federation estimated shoppers spent 7.2% more than last year. However, this is a result of the deep discounting seen by retailers.

Mortgage Bonds are testing resistance at the best price levels of 2008. We will float, but be ready to lock should conditions change.

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The Week's Economic Indicator Calendar

11-28-08
Larry Bailey
Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

Economic Calendar for the Week of November 24 - November 28

Date ET Economic Report For Estimate Actual Prior Impact
Mon. November 24 10:00 Existing Home Sales Oct 5.05M 4.98M 5.14M Moderate
Tue. November 25 08:30 GDP Chain Deflator Q3 4.2% 4.2% 4.2% Moderate
Tue. November 25 08:30 Gross Domestic Product (GDP) Q3 -0.5% -0.5% -0.3% Moderate
Tue. November 25 10:00 Consumer Confidence Nov 39.5 44.9 38.0 Moderate
Wed. November 26 08:30 Personal Consumption Expenditures and Core PCE YOY NA 2.1% 2.2% HIGH
Wed. November 26 08:30 Personal Consumption Expenditures and Core PCE Oct NA 0.0% 0.2% HIGH
Wed. November 26 08:30 Personal Spending Oct -0.7% -1.0% -0.3% Moderate
Wed. November 26 08:30 Personal Income Oct 0.1% 0.3% 0.2% Moderate
Wed. November 26 08:30 Jobless Claims (Initial) 11/22 537K 529K 543K Moderate
Wed. November 26 08:30 Durable Goods Orders Oct -2.5% -6.2% 0.8% Moderate
Wed. November 26 09:45 Chicago PMI Nov 38.5 33.8 37.8 Moderate
Wed. November 26 10:00 Consumer Sentiment Index (UoM) Nov 58.0 55.3 57.9 Moderate
Wed. November 26 10:00 New Home Sales Oct 450K 433K 457K Moderate

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The Mortgage Market View...

11-28-08
Larry Bailey

With the economy slowing and holidays just around the corner, many consumers may be looking to credit cards to help them get through the heavy shopping season. While that may be a good short-term solution, you want to make sure you don't overlook the long-term impact on your credit rating. After all, the actions you take today could hang over your head for years to come--and may make it tough for you to get the home loan or car loan you want in the future.

To help you make sure you manage your credit cards--and your credit score--during the upcoming holiday spending season, follow these steps:

Double-check your card limits. Many credit card companies today have started lowering credit limits. That means you have less credit available, but it also may mean that your credit score is about to take a hit. That's because approximately 30% of your credit score is based on the amount you owe in relation to your available credit. So, if a credit card company cuts back your limit, you may find that you're suddenly almost maxed out. That's not a good sign for your long-term credit score rating.

Ask, pay down, or move around. If some of your credit limits have changed or are nearly maxed out, you can take a few steps to help alleviate the problem. First, consider simply asking for a higher limit to your card...not necessarily to use up with spending, but to allow more unused credit line to be available and therefore boost your credit score. You can also pay more money to the cards that are near the credit limit, if you can. Or, if you have cards with little to no remaining credit line, transfer some of the larger balances onto the cards with lower balances. That'll give you a more... well... balanced financial picture.

Leave home without it. One of the best tips for the holiday season is to: make a budget, identify specific items, and then leave home without your credit card. Instead, bring just enough cash to purchase the items on your list. That will help you resist the urge to impulse buy, and keep your credit card balances lower.

Pick a card... not just any card. If you can't bring cash, make a credit card plan. Identify specific items that you'll pay for on specific cards. By making a plan and spreading your purchases to different cards, you won't overspend and you won't risk running up one or two cards that are near the credit limit, which will hurt your credit rating.

Resist card offers at the counter. Retailers are famous for offering "savings" when you open a credit card. But those savings often don't outweigh the long- and short-term negatives. For one thing, opening a new account--or multiple accounts in a short period of time--can negatively impact your credit score. In addition, consumers often spend more than planned when a new card is suddenly available. So this holiday season, resist the temptation.

Stay active. If you have older cards that you don't use, make sure you keep them active. For one thing, some of those older cards help establish a longer history of positive credit. For another, the available credit on those older cards can help keep your credit score higher because it improves your overall debt-to-credit ratio. To keep those cards active, make sure you charge one or two items on them throughout the year... like, say, when you go shopping for the holidays. Then, pay them off when the bill comes in.

Always pay on time. Your payment record is a very large part of your credit score, so it's crucial that you have an idea how your holiday shopping will impact your credit card bills and that you make a plan to pay those bills on time. If you have trouble for any reason, contact your card companies right away to work out a plan that helps you pay down your debt... and save your credit rating from a huge hit.

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