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Weekly Market Update – June 16, 2008

John Thomas June 17, 2008
NOT MUCH MOVEMENT LAST WEEK: The markets did not move much: The Dow was up 0.80% and the S & P 500 was down 0.05%. NEXT INTEREST RATE MOVEMENT WILL BE UP?: The Fed’s increased public anti-inflation discussion has led to market expectations of one or more rate hikes by the year-end. The Fed funds futures market is pricing in 75 basis points by January. The Fed outlook has changed over the last several weeks. In the April 30 policy statement, the Federal Open Market Committee hinted strongly that it was finished with rate cuts, but the market expected that a weakening economy would force the Fed to cut at least once more. Since late April, economic data have been mixed, but not as bad as many feared. The price of crude oil has continued to rise, to a point where the Fed’s concerns about inflation are now dominant. IN EUROPE: At the European Central Bank (ECB), they have made it clear that inflation is their number one concern and they aren’t thinking about a cut in rates. Jean-Claude Trichet, the ECB Chairman, has strongly hinted that their next move is likely to be an increase in rates. If that happens, and the U. S. doesn’t match the increase, it will put added downward pressure on the dollar and likely cause oil prices to continue to go up. ECONOMISTS LESS PESSIMISTIC:  This past week, once again, the Wall Street Journal asked a panel of Wall Street economists whether we are in a Recession. 52% say yes. That’s the bad news. The good news is that this same group was asked the same question in April and 76% said yes.  It looks like economist opinions are as volatile as the markets.

DEBT CAN BITE YOU AT ANY TIME, AND COMPOUNDING WILL KILL YOU: Keep Reading...

Delware Mortgage Rates – June 17, 2008

John Thomas June 17, 2008

Here are the daily thoughts on floating or locking your Delaware Mortgage Loan Interest Rate.

As always – consult your favorite mortgage professional who will be able to offer the best advice for YOUR unique situation.

Building Permits and Housing Starts came in almost exactly where they were predicted to be. Producer Price Index (PPI) came in higher than expected, though core PPI came in exactly on target (good news). Capacity Utilization and Industrial Production both came in below expectations.

Technically speaking – the FNMA 6.0% 30-year bond fell yesterday to support levels. This morning it appeared to be taking a nice bounce with the core PPI news. Bonds are still in an oversold position leaving a lot of room on the upside. The Bond went up, down then back up today. Keep Reading...

Demystifying Real Estate Investing

John Thomas June 14, 2008

Demystifying Real Estate Investing

Overcoming the misconceptions that keep you from investing in real estate. 

Most people who are investing in real estate are being stopped by doubt and fear. They may want to invest in real estate, but each time they consider taking action, they come up with an obstacle or a core belief that keeps them from moving toward their dreams

According to The Millionaire, Real Estate Investor by self-made millionaire and real estate investor Gary Keller, most successful real estate investors have had to overcome certain beliefs that later proved to be unfounded. Some of these beliefs center around the way they view themselves as investors, and the others are focused on beliefs about investing. By addressing these doubts and fears, and recognizing that they’re unfounded, you’ll eliminate the major barriers to becoming a real estate investor
Keep Reading...

Free First Time Home Buyer Seminar – June 28, 2008

John Thomas June 8, 2008

There will be a Free Delaware First Time Home Buyer Seminar on Saturday, June 28, 2008, at 10:00 AM. The seminar will last about 2 hours and each participant will be able to receive a free copy of their tri-merge credit report. The seminar will cover all of the basics of buying a new home in Delaware. The seminar will cover Delaware FHA loans, Delaware VA loans, My Community loans, First Time Home Buyer Loan Programs, and the Delaware USDA Rural Housing Program.

Each participant will receive a Free Audio CD on Credit Scoring, Credit Scoring Handbook, Homebuying Handbook, and an opportunity to meet with a mortgage planner to be pre-approved to buy a home at the seminar. You will also learn the importance of credit in buying a home and learn valuable tips on how to improve your credit score. Learn what programs are available to help with down payment and closing costs. The new loan limits for conventional and FHA will be covered as well as changes to borrowing 100% financing. Keep Reading...

Weekly Market Update – June 8, 2008

John Thomas June 8, 2008

EQUITY MARKETS HAVE A POOR WEEK:

Some modest positive news early in the weak was drowned out by rising oil futures prices and a radical jump in unemployment numbers. The Dow Jones Industrials were down 3.39% and the S & P 500 was down 2.83%.

REITS BOUNCING BACK: Real estate investment trusts (“REITs”) outperformed other major market benchmarks during the first five months of the year. The FTSE NAREIT all-REIT index was up 6.5%, for the period, while equity REITs rose 8.2%. Self-storage and residential REITs were the biggest gainers, posting returns of 21.1% and 15.6% respectively. The REIT gains have helped the group recover from last year. Equity REITs posted a return of -17.8% last year. This is a great example of the premise behind asset allocation. People who jumped out of REITs last year missed out on gains of 2008 when REITs have been a good counterbalance to equity investments. One of the many things we as financial planners must assume in making projections are investment returns. In times like the present, clients will challenge even fairly conservative, long-term return assumptions.  Evidently, however, there are still optimists out there. The governor of Pennsylvania, Ed Rendell wants to sell the toll-taking rights on the Pennsylvania Turnpike for an up-front payment, pay off some debt, and invest the remaining $10 billion with the state pension fund, set aside a bit for inflation, and pocket an average 12 percent each year, or $1.1 billion, to fix rundown roads and bridges.

MUNICIPAL BONDS GET A SHOT IN THE ARM: 

Markets hate uncertainty. Fortunately, the U.S. Supreme Court just took some uncertainty out of the municipal bond market. A federal appeals court had held that individual states may not exempt residents who own same-state municipal bonds from state income taxes.  This case was accepted to the U.S. Supreme Court (Dept. of Revenue of Kentucky vs. Davis) which decided that states may continue to exempt their residents from paying taxes on that state’s municipal bonds. Clarifying the tax status of state municipal bonds for local residents removes an issue that had been weighing on the market for municipal bonds in addition to the general credit issues affecting the markets. Keep Reading...

Free Delaware Budgeting Seminar – June 11, 2008 at 6:30 PM

John Thomas June 7, 2008

There will be a Free Budgeting Seminar on Wednesday, June 11, 2008, from 6:30 PM till 8:00 PM at the Primary Residential Mortgage’s Office in Newark, Delaware. The seminar will cover the basics of making a household budget, how to track daily, weekly, and yearly expenses, and how to use your budget as part of an overall financial plan. Each participant will receive a free Excel Budget Calculator and a Budgeting Handbook. You will also learn how to not only cut your expenses but increase your income.

To register for the Seminar, please call 302-368-7132 Ext. 12 and ask for John Thomas. Keep Reading...

Delaware Mortgage Rates – Update for May 22, 2008

John Thomas May 22, 2008

Delaware Mortgage Rates came out lower today because of the news yesterday plus the anticipation of the release of the jobless claims. The 5.5% coupon fell 13/32nds this morning bringing us to 100-04.

The reasons for this are not entirely straightforward. Jobless claims released today were 365k. This was better than the expected 370k, but still maintains a low moving average, and keeps the level of continuing claims over 3 mil. However, the markets interpreted this “turn around” as a potential early sign of a recovering labor market. Thus, stocks are up a bit, and a blow was dealt to bonds. Keep Reading...

Delaware Mortgage Rates – Update for May 21,2008

John Thomas May 21, 2008

As discussed yesterday, each time the price curve on the 5.5% coupon approaches 101-00, we begin to encounter resistance, and it will likely take an incontrovertibly grim economic outlook to create sufficient demand to push us higher. A 200 point drop in the Dow would be enough, but only if the index itself were much closer to 12000 than 13000. This would have to coincide with a lack of negative mortgage-related headlines.

We had hoped to float until the Fed Minutes today, but the Mortgage Backed Securities market appears to be getting a little too much resistance. So be advised some lenders may reprice for the worse if they already have Mortgage Interest rates out. We’re down 7/32nds on the day so far on the 5.5% coupon. Keep Reading...