Wild Market Tuesday Recap, Consumer Confidence Up, Author Tattoos ‘NYT Bestseller’ On Chest (Part 2)
Wild Tuesday Market Recap
Yesterday was quite the day for the financial markets. For an appetizer, we started with S&P cutting Greek debt to junk and downgrading Portugal. For the salad course, US home prices slipped, but Consumer Confidence rose. For the main course, Goldman Sachs representatives sat in front of the Senate and fended off accusations of exploitation while the stock market went into the tank (on fears of strong reform). And then, for dessert, the $44 billion 2-yr note auction was “mediocre” – but by then it didn’t matter.
Bond Market Reaction
All of this caused our fixed income securities, which include mortgages of course, to rally and yields to drop. 7-yr notes were up by over a point; 30-yr bonds over a point and a half. Why buy Greek debt when you can buy clean Fannie or Freddie-backed securities? Investors are worried that political pressures could block a multi-billion euro bailout of Greece. The rally caused many mortgage companies to buy back mortgage securities that were being used as hedges, and lock desks everywhere to hope that any locks taken in the last week or two will stick. The 2-year auction was adequate at best, but that didn’t matter given what was going on in stocks and sovereign debt. The 10-year rallied to 3.69% (the lowest yield close in a month) but still within the 3.56-3.99% range it’s been in since mid-December.
Goldman on The Hill
Goldman Sachs executives tried to fend off accusations they inflated the housing bubble, sold clients bad deals and made billions off the market’s collapse, in a high stakes Senate hearing. Facing tough questions from a panel of Senators, the current and former employees said Goldman was managing risk on individual positions rather than making a broad bet against the future of the housing market.
Home Price Data
Standard & Poor’s (S&P) released its S&P/Case-Shiller Home Price Index for February, and the annual rates of decline of the 10-city and 20-city composites improved in February compared to January 2010 but prices are still 30% below the July 2006 peak. In fact, for the first time since December 2006 the annual rates of change for the two composites were positive, and increased .6% from February of 2009. Analysts pointed out that where prices are still falling, the lower tier is still underperforming (i.e., the higher tier is outperforming) because credit problems still dominate. But when the recovery kicks in, lack of readily available financing for jumbo mortgages is compressing any potential appreciation in higher-priced homes.
Consumer Confidence Jumps
Are you more confident than you were a month ago? The Conference Board’s Consumer Confidence shot up to a level of 57.9 in April, up from 52.3 (revised from 52.5), and moving to a new cyclical high. The level was pegged at “100” in 1985, and is a survey of 5,000 households.
Author Tattoos ‘NYT Bestseller’ On Chest, Part 2
A few weeks ago I mentioned the marketing book, “ROAR! Get Heard in the Sales and Marketing Jungle.” It turns out that it became a best seller!!! Obviously the author (Kevin Daum) thanks all the buyers of the book, and it became the #1 best selling sales and marketing book on Amazon and thousands of sales folks are boosting their numbers using it. He is sure to make his tattooed goal. No wonder, it’s a fun read and teaches how to identify and close the different types of buyers. The first print run with the special chapter and webinar is almost gone so you might want to pick up a copy soon. Pick it up today at Barnes & Noble or you can order the book here and check out Kevin’s latest video. It’s short and funny (like Kevin).
Mortgage Apps Fell Last Week
Today the MBAA’s applications for last week showed apps falling. The overall index decreased 2.9% in the week ended April 23, with the refinance measure dropping almost 9% but purchases rising 7.4% to the highest level since October (the month before the tax credit was initially due to lapse).
Preview for Today
Later today we have a 5-yr auction, and the Fed announcement. To sum it up, don’t look for any rate change in overnight rates. Instead, if it is a slow day, the bond market will pick apart the announcement for word changes. Whether it is Greece, Spain, Portugal, Abu Dhabi, Las Vegas, the commercial property market in general, foreclosures here in the US, there are a lot of problems out there, and the Fed pushing rates higher is very unlikely. The yield on the 10-yr is back up to 3.73% and mortgage prices are worse by about .125.
Daily Humor
Two guys are sitting in a bar, with one looking very glum.
Joe asks, “What’s the matter?”
The glum guy replies, “My wife walked out three days ago. Never came back. Said she was only going out for a carton of milk.”
Joe says, “That’s not good. How are you coping?”
The glum fellow cheers up and says, “Surprisingly OK. It’s amazing how fast you get used to black coffee!”