MMG Weekly: Economic Reports a Mix of Tricks and Treats

For the week of Oct 25, 2010 --- Vol. 8, Issue 43

In This Issue

Last Week in Review: The positive and negative mix of economic news continues to brew and boil... what’s happening with home loan rates? Forecast for the Week: More news on the housing market is in store - and Stock earnings season continues too – all in advance of the Fed’s important upcoming meeting. View: Halloween candy may be a treat, but an attack on your PC sure isn’t. The cyber-tricksters are out in full force, so check out the View article below for some important information.

Last Week in Review

"DOUBLE, DOUBLE TOIL AND TROUBLE; FIRE BURN AND CAULDRON BUBBLE..." No, the witches from Shakespeare’s "Macbeth" weren’t talking about the economy or the labor market – but economic reports of late are indeed swirling about as if in a cauldron, with a potent mix of both tricks and treats. One report will show improvement for the economy, while another tells a more negative tale. So what news came about this week, and what impact did it have on home loan rates? Last week, there was reasonably good news on the housing front, as Housing Starts for September were up 0.3%, to a seasonally adjusted 610,000 unit pace, which was higher than expectations of 579,000. The good news is that this represents the third consecutive month of expansion and actually the highest level of Housing Starts since April. Yet, while this is an encouraging sign and does suggest some stabilization in housing, we can't break out the party hats just yet. The improvement in Housing Starts is coming off of very depressed levels... and additionally, Building Permits, which are a sign of future construction, came in at 539,000, which was below expectations and also the lowest level we’ve seen in more than a year. The bottom line for housing is that people need to gain back real confidence and security about their job and economic prospects before we'll see a marked turn around. Speaking of that important job market, last week’s Initial Jobless Claims were 452,000 – and Jobless Claims have been stuck near that 450,000 mark for a long time - and there will be no meaningful decrease in the Unemployment Rate until Initial Jobless Claims reach and start moving below the 400,000 level. Overall, we still have 8.5 million people collecting some sort of unemployment benefits, so we’ve still got a ways to go before we’re out of the woods. Reports on housing, manufacturing, jobs, and inflation are a big part of what will guide the Fed’s ultimate decision regarding the next round of Quantitative Easing (QE2), and a formal announcement is expected during the Fed’s next meeting of the Federal Open Market Committee on November 3rd. Remember that QE is the concept of the Fed becoming a buyer of Treasuries and Bonds, in a bid to keep interest rates low and therefore stimulate the economy. It’s important to note that QE may also devalue the Dollar, and boost our economy through making our exports relatively cheaper for foreign buyers. And this is not a bad thing, but we have to be aware that while more QE might provide an initial decline for home loan rates, the devaluation of the Dollar will ultimately drive rates higher. I will be watching this situation closely in the weeks ahead. Meanwhile, last week’s news caused both ups and downs for Bonds and home loan rates, and they ultimately ended the week about the same as where they began. If you – or a client, friend, family member, neighbor, coworker – would like to learn more about taking advantage of historically low home loan rates, please don’t hesitate to call or email me. It would be an honor to provide a free consultation for you or any of your contacts. HALLOWEEN MAY BE A BIT SPOOKY…BUT A CYBER ATTACK ON YOUR COMPUTER IS DOWNRIGHT GHOULISH! CHECK OUT THE MORTGAGE MARKET GUIDE VIEW FOR SOME SIMPLE STEPS TO HELP KEEP YOUR DATA SAFE.

Forecast for the Week

More housing news is in store this week, with both Monday’s Existing Home Sales Report and Wednesday’s New Home Sales Report. But whether these reports will show a move forward or backwards in the housing arena remains to be seen. Again, a marked improvement in the labor market will be necessary in order to see a marked improvement in housing nationwide. Also, we'll get a read on the health of the economy with Wednesday’s 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, like furniture, televisions, appliances, sporting equipment, vehicles, copy machines... all manner of things. It’s an interesting report, as people tend to hold back on these types of purchases when they are feeling a need to be extra conservative with their finances, or feel insecure about their employment. Meanwhile, Friday will bring another read on the economy with the Gross Domestic Product Report, which is the broadest measure of economic activity. And not to be missed is the Initial and Continuing Jobless Claims Report on Thursday, as well as earnings reports from Proctor & Gamble, 3M, Exxon Mobile and more. 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, Bonds and home loan rates moved up and down due to movement in the Stock market and other economic news. I’ll be watching closely to see what happens this week. ----------------------- Chart: Fannie Mae 3.5% Mortgage Bond (Friday, October 22, 2010)

The Mortgage Market Guide View...

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Quantitative Easing Wants To Be Friends

In This Issue

Last Week in Review: Quantitative Easing is heading our way, but when, why, what will it mean? Many questions remain... Forecast for the Week: What kind of outlook will the economic reports of the week create? View: 5 Facebook posts that put you at risk! Do you know what they are?

Last Week in Review

"EVERYTHING’S COMING OUR WAY..." Those words from Carlos Santana’s song come to mind following last week’s release of the Fed’s September Meeting Minutes, as well as a speech from Fed Chairman Ben Bernanke. The message was pretty clear - another round of Quantitative Easing (QE2) is coming our way! Remember that QE is the concept of the Fed becoming a buyer of Treasuries and Bonds, in a bid to keep interest rates low and therefore stimulate the economy. And while all the talk had Bonds behaving in a volatile fashion - ultimately causing home loan rates to worsen for the week overall - what was said specifically... and what does it mean? First, let’s take a look at a few notes from the Fed Meeting Minutes: "Although participants considered it unlikely that the economy would re-enter a recession, many expressed concern that output growth, and the associated progress in reducing the level of unemployment, could be slow for some time." Stating that "many" Fed members expressed concern likely means that more voting Fed members are onboard with the concept of more QE. Then there was this comment, which didn’t require much reading between the lines: "Many participants noted that if economic growth remained too slow to make satisfactory progress toward reducing the unemployment rate, or if inflation continued to come in below levels consistent with the FOMC's dual mandate, it would be appropriate to provide additional monetary policy accommodation." This is clearly telling the markets that the Fed will be stepping in with the money printing presses if the economy doesn't pick up. And with just a few weeks remaining before the next Fed Meeting, and recent economic reports being weak at best... rest assured, more QE is coming. And this was underscored as Fed Chairman Ben Bernanke delivered a highly anticipated speech on Friday, also making a strong case in support of more Quantitative Easing. He stated "there would appear - all else being equal - to be a case for further action" and additionally, that the "FOMC is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation over time to levels consistent with our mandate." OK - so it seems clear - more QE is coming. But is this a good thing? In Bernanke’s comments on Friday, he noted that the Fed has much less experience in judging the economic effects of more QE versus their more traditional monetary policy actions - and said that this "makes it challenging to determine the appropriate quantity and pace of purchases and to communicate this policy response to the public." True - this amount of money-printing is unprecedented... and begs the question of if more QE really makes sense. The idea is to strengthen the economy by helping make interest rates lower... but the questions remain - will it work, and what consequences may result? ----------------------- QE2 is Coming, But Questions of Its Effectiveness Still Remain Interestingly enough - one result that is likely is that the US Dollar would weaken... and is already weakening following all the talk of QE. And remember, a weaker Dollar helps make our exports more attractive to foreign buyers, due to the weakened US currency making our products less expensive to purchase by foreigners. And while the government will never say it - as the US has been accusing China of very similar tactics - this Dollar devaluation may be exactly what the government has in mind. Think about it... the "cover story" is all on how QE will help interest rates improve - but realistically, are slightly lower rates even what is truly needed to boost consumer demand and create jobs? Rates are pretty low as they stand right now...so why do more QE? Hmm... might just be to devalue the Dollar, and boost our economy through making our exports relatively cheaper for foreign buyers. And this is not a bad thing - but we have to be aware that while QE2 might provide an initial decline for interest rates - the devaluation of the Dollar will ultimately drive rates higher. This story is far from over - so stay tuned as it continues to unfold in the coming weeks, I will be keeping you informed. THE IMPACT OF QE2 ISN’T THE ONLY THING ON THE MINDS OF CONSUMERS THESE DAYS. A NUMBER OF PEOPLE ARE QUESTIONING THE RISKS OF SHARING INFORMATION ON SOCIAL NETWORKING SITES LIKE FACEBOOK – AND FOR GOOD REASON. CHECK OUT THE MORTGAGE MARKET GUIDE VIEW BELOW FOR INFORMATION ABOUT 5 POSTS THAT COULD PUT YOU AT RISK!

Forecast for the Week

This week’s economic calendar brings us new insight into the health of the manufacturing and housing sectors of the economy. We’ll start off with reports on Capacity Utilization and Industrial Production on Monday. The capacity utilization rate provides an estimate of how much factory capacity is in use. If the utilization rate climbs too high it can lead to inflationary bottlenecks in production. The Federal Reserve watches this report closely and decides how to set interest rates on the basis of whether production constraints are threatening to cause inflation. Tuesday brings us more housing news with the latest reports on Housing Starts and Building Permits for September. That news will be followed by the release of the Fed’s Beige Book on Wednesday. The Beige Book - which is officially known as the Survey on Current Economic Conditions - contains anecdotal information on the current economic and business conditions. Thursday we’ll see another round of Initial Jobless Claims. In last week’s report, Initial Jobless Claims rose to 462,000, which was above the 450,000 that was expected. That was a disappointment, as it seems that the economy is unable to string together a couple of solid weeks with Jobless Claims below 450,000. Finally, the week wraps up on Friday with the Philadelphia Fed Index, which is one of the most important regional manufacturing indices. 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 from the chart below, Mortgage Bonds experienced volatility last week, due in large part to the ongoing comments about Quantitative Easing. ----------------------- Chart: Fannie Mae 3.5% Mortgage Bond (Friday, October 15, 2010)

The Mortgage Market Guide View...

5 Facebook Posts That Put You at Risk Be sure you're not sharing too much information with friends, family and others online. By Cameron Huddleston, Kiplinger.com There was a big outcry recently when it was revealed that personal data of Facebook users had been posted to a database open to everyone. (See Congress to Crack Down on Facebook.) Facebook users, naturally, were concerned about their privacy. Yet, every day Facebook and other social network users publish personal information that could put them at risk without thinking twice. "An awful lot of people think when they get online and communicate with their friends that they are invincible," says Adam Levin, chairman of Identity Theft 911. A seemingly benign post or piece of information could make you a target of identity thieves and traditional crooks. To protect yourself, here are five things you should avoid posting online. 1. Date of birth. Almost 60% of social networkers post their date of birth, according to a survey by Identity Theft 911. After all, most of us like to be wished a happy birthday. But resist the urge to post your complete birth date -- including the year -- on your Facebook profile just to get a lot of messages on your big day. This is valuable information for identity thieves. I know you're thinking only your friends see what you post. But if someone does a search for your name, that person will see your birth date if it's listed in your profile. 2. Child's date of birth. When you post "Happy Birthday to my sweet Susie, who turns 5 today," you're giving identity thieves valuable information about your child. When it comes to your kids, resist the urge to post any information about them (see Protect Your Kids From ID Theft). 3. Travel plans. Surely you've seen Facebook posts like this: "We're going to the beach next week. Can't wait." In fact, you may be guilty of it yourself -- 18% of social network users post travel times, according to the Identity Theft 911 survey. Guess what? You've just extended an invitation for people to burglarize your home. Three men in New Hampshire burglarized more than 18 homes by checking Facebook status updates to see when people wouldn't be home (see Burglars Said to Have Picked Houses Based on Facebook Updates). 4. Address. If your address is on your profile AND you let people know when you're going out of town, well, you know where I'm going with this. Nonetheless, 21% of social network users post their address, according to the Identity Theft 911 Survey. 5. Mother's maiden name. It may seem like common sense not to post your mother's maiden name on a social networking site, but about 11% of the people who responded to the Identity Theft 911 survey said they did. Identity thieves will hit the jackpot if you reveal this bit of information online. Not only should you avoid posting any of this information, but also you should fix your Facebook settings to control who sees what on your page. Use different passwords for social media sites than you use for financial sites, such as your bank or credit card site. Be careful about clicking on links on Facebook or similar sites because they could contain viruses that will secretly track your passwords, account numbers and other things. Reprinted with permission. All Contents ©2010 The Kiplinger Washington Editors. www.kiplinger.com. -------------------------- Economic Calendar for the Week of October 18-22, 2010 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 October 18 - October 22 Date ET Economic Report For Estimate Actual Prior Impact Mon. October 18 09:15 Industrial Production Sept 0.3%   0.2% Moderate Mon. October 18 09:15 Capacity Utilization Sept 75.0   74.7 Moderate Tue. October 19 08:30 Housing Starts Sept 585K   598K Moderate Tue. October 19 08:30 Building Permits Sept 565K

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Is the Labor Market Showing Signs of Life... or Not?

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Phil Jensen Mortgage Director AmeriFirst Financial Phone: 602-692-7445 Fax:: Phil@JensenTeam.com www.JensenTeam.com

In This Issue Last Week in Review: The highly anticipated Jobs Report for September is in. What was the news... and what does it mean for home loan rates? Forecast for the Week: With the Meeting Minutes from the Fed’s last get together coming - as well as Retail Sales numbers, two inflation reports, and more Third Quarter earnings season ahead, a busy news week is in store! View: Texting while driving has become a hot issue... but it doesn’t have to worry you anymore. Find out why below. Last Week in Review "EVERYBODY’S WORKING FOR THE WEEKEND...." (Loverboy, 1981) Or... are they? Unfortunately, many folks out there these days sure wish they were working at all... and the Labor Department reported last Friday that the US lost 95,000 jobs in September. What else did the Jobs Report say and what could the news mean for home loan rates? Read on for details. A closer look at the Jobs Report for September shows that 159,000 of the jobs lost were government workers, many of which are the unwinding of the temporary census hires. The more important private sector added 64,000 jobs - but still not great, and also below the 74,000 expected. But this number confirms the thought that the economy, or the Job market, is stabilizing and perhaps even improving, albeit it at a very gradual pace. More on why this is so important in a minute. The Jobs Report also showed that the Unemployment Rate remained at 9.6%, just below the 9.7% anticipated. However, it’s likely the actual rate of unemployment is higher. Why? Because if an unemployed individual does not seek employment for four weeks, they are removed from the count of the "officially unemployed." And with unemployment benefits available for about 2 years, it increases an unemployed individual's chances of becoming less motivated to look for a job, until the benefits are close to running out. This can skew the headline Unemployment Rate, and is evidenced by the sharp rise in the overall unemployment rate or "U6" measurement of unemployment, which stands at 17.1%. The U6 rate accounts for these discouraged workers who have not sought employment for the past four weeks, as well as those who have accepted part-time employment but would prefer to be working full-time. Now, back to the question of why signs of good - or bad - economic news are particularly important of late. The Fed will be watching the various economic reports very closely over the next few weeks in advance of their next regularly scheduled meeting on November 2-3, as they are considering a second round of Quantitative Easing (QE2) to ensure that our slowing economy does not slow even further. If the economic reports that are ahead are more negative than positive, this will increase the likelihood of more QE... but it’s not a foregone conclusion at this point in the least. So what does all this have to do with home loan rates? If the economic news continues to be soft and the Fed does go through with another round of QE, Bond prices and home loan rates may initially improve for two reasons. First, if the economic data is weak leading up to an announcement - that soft economic news tends to be bad for Stocks, but good for Bonds and therefore home loan rates. Additionally, Bonds would improve simply because the announcement of QE would include large Bond purchases. But keep in mind that the key word is "initially." Even though Bonds and home loan rates could initially improve, the eventual softening of the Dollar, rising commodity prices, and rise in Stock prices would become a drag on Bonds, which would negatively impact home loan rates. We’ll see what happens in the coming weeks leading up to the Fed’s next meeting on November 2-3. But last week, meanwhile, the news had a positive impact on Bonds and home loan rates, as they ended the week about .125 to .25 percent better than where they began. If you or anyone you know would like to learn more about taking advantage of historically low home loan rates, please don’t hesitate to call or email me as soon as possible. Or forward this newsletter on to anyone you think may benefit and I’d be happy to talk to them free of charge. FINDING IT HARD NOT TO TEXT AND DRIVE? YOU CAN DO IT SAFELY…THANKS TO THIS GREAT NEW APP. CHECK OUT THE MORTGAGE MARKET GUIDE VIEW FOR DETAILS. Forecast for the Week It may be a short week in the Bond Market, with the market closed Monday for the Columbus Day holiday (the Stock Market will be opened), but there will still be plenty of news to work through. On Tuesday, we’ll get a look at the Minutes from the Fed’s September 21st Meeting, and these may give us even more information about which way the Fed is leaning in the QE department. A double dose of inflation news ends the week, with the Producer Price Index on Thursday (which measures inflation at the wholesale level) and the Consumer Price Index on Friday. Remember, inflation is the archenemy of Bonds and home loan rates, so any hint that inflation is increasing could cause home loan rates to worsen. Two other reports to note include Thursday’s Initial and Continuing Jobless Claims (last week’s report, while not great, was slightly better than expected) and Friday’s Retail Sales Report. In addition, third quarter earnings season kicks into full gear this week. Some reports to look for include JP Morgan Chase and General Electric, reporting respectively Wednesday and Friday before the markets open. 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, Bonds and home loan rates hit record levels as the talk of QE2 continued. I’ll be listening closely for the latest developments on that front this week. ----------------------- Chart: Fannie Mae 3.5% Mortgage Bond (Friday, October 8, 2010) The Mortgage Market Guide View... Safer Driving... There’s an App for That! A recent study by the National Highway Traffic Safety Administration found that distracted driving was the leading cause in 448,000 accidents and 5,474 highway deaths in 2009. That represents a 16% increase from 2008. That increase is one reason why U.S. Transportation Secretary Ray Lahood has proposed mandatory warnings in automobiles about distracted driving. Lahood, like many parents today, is concerned about the growing increase of technology use in automobiles - including distractions that are being added to new cars that allow "drivers to update Facebook, surf the Web or do any number of other things instead of driving safely," Lahood said. Even without such built-in technology, drivers today are often distracted by incoming text messages on their cell phones. The good news is that technology can also help solve this problem. New services - like DriveSafe.ly - have sprung up that eliminate the need to read text messages AND eliminate the need to respond. Here’s how it works... You download an application to your phone. Then, when you get in your car to drive, you simply turn the application on. When you receive a text message, the application actually reads it to you... automatically... and out loud. So there’s no need to take your eyes off the road. Better still... the application automatically sends a reply message stating that you are driving and will respond as soon as you reach a destination that allows you to safely reply. The application can be used on a variety of phones and there are even different plans - including a free version of DriveSafe.ly as well as family and business plans. If you receive a lot of text messages while driving or if you have a teenager of driving age, this could be one of the most important safety steps you do this year. Take a few minutes to check it out. After all, this simple application could save your life or the life of someone you know. -------------------------- Economic Calendar for the Week of October 11-15, 2010 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 October 11 - October 15 Date ET Economic Report For Estimate Actual Prior Impact

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MMG Weekly: QE or Not QE...That Is The Question

For the week of Oct 04, 2010 --- Vol. 8, Issue 40

In This Issue

Last Week in Review: The Fed faces a tough decision, but what could it mean for Bonds and home loan rates? Forecast for the Week: This is a huge week, despite the limited number of reports due out... find out why. View: Before you plan your next trip or a winter vacation, consider this surprising tip!

Last Week in Review

"I CAN NO LONGER STAND HERE WAITING FOR YOU TO DECIDE..." Those lyrics from the band Chicago’s 1980’s hit sum up the sentiments of many market analysts and traders after last week’s back and forth statements from Fed officials about the possibility of another round of Quantitative Easing... otherwise known as "QE2". As we stated last week, many analysts have been feeling that QE2 was very likely, if we continue to see weak economic reports. But comments made by a number of Fed officials throughout the week indicated that QE2 may still be up in the air. For example, Atlanta Federal Reserve President Dennis Lockhart stated, "there is growing sentiment that further accommodation through large asset purchases is coming... but at this point in time, it's not a foregone conclusion that we need to go there." Those comments were followed by other similar comments from other Fed officials, including Philadelphia Fed President Charles Plosser, who doesn't support any further Bond buying. Additionally, Boston Fed President Eric Rosengren said that monetary stimulus will depend on economic data, while Minnesota Fed President Narayana Kocherlakota says new asset buying would have a more muted impact than prior purchases. This would indicate that at least a few Fed members are hesitant ab out a big QE2 package. On the flip side, however, New York Fed President William Dudley said on Friday that the Fed is almost certain to lend support through Quantitative Easing in order to ensure that a slowing economy does not fall further. He gave an example of how a $500 Billion purchase plan might impact interest rates, stating that it would have a similar impact to a Fed rate cut of .50 to .75%... and although this was just an example, the fact that he mentioned a specific number was not lost on Traders. Mr. Dudley went on to say that he feels a double dip recession is not an issue, but rather the focus is on how the economy can grow faster than its current pace. Those comments are important because the markets figured that QE2 would be a lock, unless the Fed sees stronger-than-expected economic data before its November 3rd meeting... specifically, employment data. But last week the analysts and investors were faced with uncertainty around the issue and were left sifting through comments to try to predict what the Fed will do. And that uncertainty caused traders to shift money back out of Bonds at different times last week. ----------------------- The Fed and Chairman Bernanke Face a Tough Decision with QE2 But what would another round of Quantitative Easing mean to Bonds and home loan rates? Let’s break it down into four important aspects: (1) When would it happen? (2) How much money would it involve? (3) Why is this being contemplated? (4) And what does it mean to home loan rates? First, as stated above, whether QE2 happens will be dependent upon the upcoming data releases. Many experts agree that if the Fed does make a move, it will most likely happen at the next Fed meeting, which is scheduled for November 3rd. Second, the question of "how much" is still up in the air. As stated above, New York Fed President William Dudley gave an example of a $500 Billion purchase - but estimates are all over the board at this point, from $200 Billion to $2 Trillion. Yet the big question is whether QE2 will even do any good. Recently, former Fed Governor Larry Meyer felt that even $2 Trillion would hardly move the needle on GDP growth or reduce unemployment rates. In fact, he likens it to pushing on a string. Mr. Meyer's sentiments were also echoed last week by former Fed official Joe Gagnon, who estimated that the Fed is indeed likely to do at least $1 Trillion in additional QE, but that it would have little impact. That brings us to the third question: Why even contemplate QE2? Think about this: a large round of QE2 would almost assuredly hurt the US Dollar. And by hurting the US Dollar, our exports become more affordable abroad, as well as making imports appear relatively more expensive. This helps large multi-national companies, which have a large influence on the economy, as well as the major Stock market indices. This could be the goal of the Fed. Ahh...but you can't outright say you are trying to weaken your currency. After all - haven't many members of Congress and the Administration been bashing China for currency manipulation? The US may be trying to do exactly what it has both denigrated and admonished other nations of doing. In other words, even if QE2 didn’t have a direct impact on the economy, the drop in currency value - which, if you've been paying attention to the Dollar-Euro relationship, has already been happening - would be very beneficial. But at what cost? While Stocks should benefit, Bonds may have a different reaction. And that brings us to the heart of what you need to know: What would QE2 mean to Bonds and home loan rates? If the Fed does go through with another round of Quantitative Easing, Bond prices should - initially - improve for two reasons. First, Bonds would likely improve due to the soft economic data causing QE2. Second, Bonds would improve simply because the announcement of QE2 would include large Bond purchases. The key word is "initially." That’s because, even though Bonds would initially improve, the eventual softening of the Dollar, rising commodity prices, and rise in Stock prices could become a drag on Bonds, which would negatively impact home loan rates. AS YOU CAN SEE FROM THIS DISCUSSION, THINGS AREN’T ALWAYS WHAT THEY SEEM. THE SAME IS TRUE FOR MANY FINANCIAL MATTERS. TAKE, FOR EXAMPLE, THE COST OF CHECKING YOUR LUGGAGE WHEN YOU FLY. CHECK OUT THE MORTGAGE MARKET GUIDE VIEW BELOW FOR SOME SURPRISING INFORMATION ON HOW YOU CAN SEND YOUR LUGGAGE FOR LESS!

Forecast for the Week

This week’s economic calendar may be light in terms of the number of reports, but don’t let that fool you for one second. The reports that are due out may have a huge impact not only on the economy this week, but also on decisions that will shape the economy for months to come. We’ll start off with an update on the health of the housing industry, with the Pending Home Sales report on Monday morning. After that, things start to heat up with the ADP National Employment Index on Wednesday and Initial Jobless Claims on Thursday. But the big enchilada comes on Friday, when the all-important Jobs Report will be released. This report includes official labor statistics on non-farm payrolls and the unemployment rate, as well as average hourly earnings and changes in the average work week. These reports on employment are always important, but they take on even more significance in the current climate. That’s because the question of whether the Fed will move forward with another round of Quantitative Easing as we’ve been discussing, depends heavily on the employment data that is released before the Fed’s upcoming meeting on November 3rd. And since the release of the November Jobs Report on October data is due out November 5th - two days after the Fed meeting - this coming Friday’s report is the last chance for the Fed members to see the official labor statistics before they meet to discuss QE2 and other financial policies. 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 from the chart below, Mortgage Bonds experienced some volatility throughout last week. Overall, Bonds and home loan rates ended the week worse than where they began, despite the volatility. With home loan rates still at historically good levels, homebuyers - and homeowners looking to refinance - still have a tremendous opportunity. But it won’t last forever... which means now is a good time to act. ----------------------- Chart: Fannie Mae 3.5% Mortgage Bond (Friday, October 1, 2010)

The Mortgage Market Guide View...

Save Money by Shipping Your Luggage You may spend less by using a shipping company - rather than the airlines - to get your bags to your destination. By Cameron Huddleston, Kiplinger.com You may be able to save money by shipping your luggage rather than checking it in the next time you fly. The idea might sound absurd. But if you do the math - as Airfarewatchdog.com has done for you in this chart - you’ll see that it would cost you less in some cases to send your bags to your destination by FedEx, UPS or U.S. Postal Service ground shipping. Passengers who have luggage that exceeds airlines’ size and weight limits will score the biggest savings. They’ll spend about $50 less by shipping one overweight suitcase than checking it in - and up to $200 by shipping two overweight bags. Even if the cost is the same for shipping and checking bags, you get so much more from FedEx and UPS, says Airfarewatchdog.com founder George Hobica, who ships his luggage. They have better delivery records than the airlines, they provide tracking numbers so you can follow your shipment online and they let you insure items that the airlines don’t, he says. Plus, you’re more likely to get a refund from a shipping company than an airline if your luggage is damaged or lost. Another benefit: You won’t have to wait in long lines at the airport to check your bags. And if you have small children, you’ll be a lot less stressed if you don’t have to lug your kids and luggage from the parking lot to the terminal. The key is to ship your luggage a few days BEFORE your flight so that it arrives at your destination when you do. If you’re visiting a relative, the shipping logistics are easy. But if you’re going to be staying in a hotel or condo, you should consider having the shipping company hold your items so you can pick them up. Otherwise, you might have to pay a fee to have the hotel or rental office hold your luggage until you arrive. Reprinted with permission. All Contents ©2010 The Kiplinger Washington Editors. www.kiplinger.com. -------------------------- Economic Calendar for the Week of October 4-8, 2010 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 October 04 - October 08 Date ET Economic Report For Estimate Actual Prior Impact Mon. October 04 10:00 Pending Home Sales Aug 1.0%   5.2% Moderate Tue. October 05 08:15 ISM Services Index Sept 51.8   51.5 Moderate Wed. October 06 08:15 ADP National Employment Report Sept 18K   -10K HIGH Thu. October 07 01:00 Jobless Claims (Initial) 10/02 455K

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