In This Issue

Last Week in Review: Washington has done it again, passing major financial reform legislation. Find out what this will mean for our economy… and the great home loan rates we’ve been seeing.
Forecast for the Week: A double dose of housing news is in store, and earnings season continues with reports from Goldman Sachs, Morgan Stanley, and more.
View: The web is all a “twitter” these days. Find out what the big deal is, and how “tweeting” can help you or your business.
Last Week in Review

They say the only constant is change… And more change is coming, as the sweeping Financial Regulation Bill was passed by the Senate last week and will be signed by President Obama in short order to become law. So what does this change mean… and how will it impact home loan rates? Here’s what you need to know.
The Bill calls for a new consumer protection agency and prohibits Banks from taking risky bets. While those things are important, it’s also important to realize that this legislation… over 2,000 pages worth… amazingly does nothing to address the core reasons for the financial collapse. Fannie Mae and Freddie Mac are completely left out of this legislation. The credit rating agencies, who may have played the largest role in the financial collapse, also go unmentioned.
In fact, when former Fed Chairman Alan Greenspan was asked about the Financial Regulation Bill, he noted that this was the first time the Fed was not asked to write a regulation of this kind. He also said that there are “unintended consequences” in every page of this bill.
And one consequence we’ve seen already is that corporations are hoarding cash, and are somewhat stuck like a deer in the headlights due to the uncertainty that this and other pending legislation is creating. And when corporations hoard cash, they don’t typically hire workers, and job creation is crucial to our recovery.
What all this will mean for our economy and home loan rates remains to be seen… which is why now is the perfect time to act, while home loan rates continue to be some of the best they have ever been! If you or anyone you know would like to learn more about this exceptional opportunity, please don’t hesitate to call or email. Or forward this newsletter on to anyone you think may benefit and I’d be happy to talk to them free of charge.
In other news, there hasn’t been much change on the inflation front, which is good news for Bonds and home loan rates. Remember: inflation erodes the return of an asset like a Bond… so inflation is the arch enemy of Bonds and home loan rates. Both the Producer Price Index – which measures inflation at the wholesale level – and the Consumer Price Index for June showed that inflation continues to remain tame.
However, two changes that would be welcome are in the retail sales and manufacturing areas. Retail Sales for June came in lower than expected for the second month in a row. Although details of the report were mixed, the overall indication is that consumers and businesses remain cautious on purchasing big-ticket items. In addition, the Empire State Manufacturing Index and Philly Fed Index showed that factories and manufacturing still look very sluggish overall. Changes for the better in both of these areas will be reflective of our economy growing stronger, and these are things to watch for moving forward.
All in all, the news from last week helped Bonds and home loan rates reach record levels again, and they ended the week about .125 percent better than where they began.
GROWING YOUR BUSINESS IS ALWAYS CHANGE IN THE RIGHT DIRECTION. CHECK OUT THE MORTGAGE MARKET GUIDE VIEW FOR AN ARTICLE FROM KIPLINGER.COM ON “TWEETING” YOUR WAY TO SUCCESS.
Forecast for the Week

There’s a double dose of housing news this week. Tuesday’s Housing Starts and Building Permits Reports will give us an update on the health of the new construction sector of the housing market, while Thursday we will get a read on Existing Home Sales.
Thursday also brings another Initial Jobless Claims Report, and any changes for the better in this area will be welcome! In fact, last week, the National Federation of Independent Businesses (NFIB) reported that its monthly “Small Business Optimism” index turned weaker in June. This is important to follow, because small businesses represent an important job creation engine – and the NFIB said the decrease was “a very disappointing outcome.”
In addition, earnings season continues this week and some reports to look for include IBM after the markets close Monday, Goldman Sachs before the markets open on Tuesday, and Coca Cola and Morgan Stanley before the markets open on Wednesday.
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 rates ended the week on an improving trend though they were unable to improve beyond a tough ceiling reflective of their best levels. I’ll be watching closely to see what happens this week.

The Mortgage Market Guide View…

“Tweets” Can Help Grow Your Business
Twitter is spreading like wildfire and companies are using it to boost sales. By Michael Doan, Kiplinger.com
You know Twitter – the social networking and microblogging service that allows people to keep in touch through “tweets” – short snippets of text sent to cell phones, BlackBerrys and PCs.
Businesses are making use of the Web format for marketing, research and customer services. Computer maker Dell sends coupons to its Twitter users. Whole Foods Market offers $25 gift cards as prizes for people who submit the catchiest messages promoting Whole Foods. Other companies send messages to foster community and build loyalty to stores and products. Uncle Sam is a player, too. The Food and Drug Administration uses Twitter to help get out the word about product recalls.
Because most Twitter messages are searchable on the Web, businesses can also use it to track customer comments and answer complaints – even offer immediate help or advice. Among firms closely tuned in to what customers are saying are Southwest Airlines, JetBlue, Comcast and Boingo, which provides Wi-Fi service at airports.
Jeremy Pepper, public relations manager of Boingo, receives and tracks all Twitter messages, blogs and other Web comments that mention the company. If, for example, someone complains to a friend about a weak Wi-Fi signal at Washington Dulles International Airport, he may get an immediate message from Pepper.
In such a case, Pepper says he’ll ask: “‘Where you are sitting…have you thought of moving? Which terminal are you in? Let me check to see if there are problems at the airport,’” he says. Once a problem is resolved, he’ll send a tweet saying he was happy to help and “have a safe flight.”
Quick, helpful responses via Twitter can go a long way to changing customers’ opinions about a firm, even turning detractors into company promoters.
Keep messages informal and conversational. “Being boring is the worst thing you can do,” says Jeffrey Mann, vice president of research at Gartner Group, an information technology research firm. Business tweets should be personalized; you may want to designate one or more employees to twitter on behalf of the company. Keep in mind that Twitter messages – limited to 140 characters each – are seen by people who choose to become “followers” of a business or an individual.
Twitter is a good tool to use at trade shows, helping to draw attendees to exhibitors’ booths as well as press conferences and receptions hosted by a company or trade group. The Oklahoma City Chamber of Commerce, for example, puts out messages about its Schmooza Palooza networking party and trade show before, during and after the event in hopes of spreading buzz about it. Results are good; attendance has grown dramatically.
Twitter is great for small businesses, too, because it’s easy and doesn’t add any expense. The only cost is the employee time it takes to write and follow others’ messages.
Consider registering your company’s name with Twitter, even if you don’t expect to use it. It’ll help prevent misuse by someone else. Go to www.twitter.com.
Reprinted with permission. All Contents ©2010 The Kiplinger Washington Editors. www.kiplinger.com.
Economic Calendar for the Week of July 19-23, 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 July 19-23, 2010
Economic Calendar for the Week of July 19 – July 23
Date ET Economic Report For Estimate Actual Prior Impact
Tue. July 20 08:30 Building Permits Jun 575K 574K Moderate
Tue. July 20 08:30 Housing Starts Jun 570K 593K Moderate
Wed. July 21 10:30 Crude Inventories 7/17 NA -5.06M Moderate
Thu. July 22 08:30 Jobless Claims (Initial) 7/17 445K 429K Moderate
Thu. July 22 10:00 Existing Home Sales Jun 5.04M 5.66M Moderate
Thu. July 22 10:00 Index of Leading Econ Ind (LEI) Jun -0.4% 0.4% Low

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

As your trusted advisor, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.

In the unlikely event that you no longer wish to receive these valuable market updates, please USE THIS LINK or email: curtis@kcmortgageplanner.com

If you prefer to send your removal request by mail the address is:

Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated. Mortgage Success Source, LLC does not grant to you a license to any content, features or materials in this email. You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.

Certified Mortgage Planner, Curtis Schartz, home, Home loan, Interest Rates, kansas city, lees summit, overland park, Pulaski Bank, purchase, Refinance, shawnee

IN THIS ISSUE…

Make your money go further this summer! The US economy appears to be slowly recovering, but there’s still a lot of work to do and Americans across the country are still looking for ways to help their money go a little further. This edition features three articles that will not only help you save, but also help you understand how the ups and downs of the US and global markets impact you.
• It’s a Small World – How do the troubles in Europe (and with the Euro) impact the US economy and home loan rates?
• A Cost-Effective Vacation – Whether you’re planning a short getaway or a long vacation, consider relaxing with nature on a cost-effective vacation.
• Q&A: Bull Versus Bear? – Why are animal names used to describe action in the Stock market?
Please forward this newsletter to friends, family members and coworkers who may find the information helpful as they head into summer. And if you have any questions or need any help at this time, just call or email to discuss your unique situation.

It’s a Small World After All…

The problems in Europe continue to dominate the headlines and influence market direction around the globe. So what exactly is going on…and what does all of this mean to you, to our economy and to home loan rates?
Due to financial instability in several countries in Europe – including Portugal, Ireland, Spain, and Greece – the European Central Bank along with the International Monetary Fund unveiled a $955 Billion loan package. Additionally, in a plan similar to our TARP plan in the US, the European Central Bank will purchase Bonds and private debt from the countries facing instability.
However, it seems that nearly a Trillion dollars doesn’t go very far these days, as the announcement didn’t lead to the confidence that was hoped for. There is concern about how these already financially strapped countries will pay for all this additional debt…and many wonder if the European bailout plan is just a temporary band-aid rather than a solution.
The result continues to be a weaker Euro. As you can see in the chart above, the price of the Euro near the end of May was well off where it was a few months ago, when it cost more than $1.50 for each Euro.
Why Is This Important?
When the Dollar was weaker, it made our imports more costly and travel to Europe more expensive. But it also made our exports far more attractive to foreign purchasers, and that has helped many of the large multi-national US corporations. As this situation is now reversing, it will likely have an adverse effect on those same multi-national corporations – which has contributed to some of the decline in Stocks we have seen.
And remember… when Stocks decline, Bonds and home loan rates are typically the beneficiary. As long as the global viewpoint that the US is a safe and stable place for Bond investments continues, Bonds and home loan rates could benefit.

Happy Campers! The Cost-Effective Vacation You Can Take Again and Again

Camping can be a relaxing vacation for an entire family, high school seniors after graduation, or just a group of friends who want to get away. It provides the opportunity to get away from the hectic pace of everyday life, to rise and sleep with the sun rather than a clock, and to enjoy the company of friends and family.
And it’s cost-effective. Not only will you save on your accommodations ($20 a night for a campsite versus $120 or more for a hotel), but you’ll also save by packing your own food rather than eating out. Better still, it’s the type of activity that you can enjoy in your own backyard, a few miles down the road, or halfway across the country.
Whether you’re planning a short getaway or a long vacation, consider packing up your camping supplies and relaxing with nature. The information below can help you plan for and enjoy your cost-effective camping vacation.
Reserve Your Spot
Camping has always been popular, but interest has increased over the last few years as the economy has slowed down and families have looked for an inexpensive way to travel and spend time together. That means campgrounds across the country are booking up faster than many people may expect.
If you’re planning a camping trip this summer – whether it’s down the road or across state lines – take a few moments now to plan the trip and reserve your campsite. There are a number of online resources for specific campgrounds and state parks, but you can also reserve spots at campsites across the country by visiting http://www.recreation.gov/ or http://www.reserveamerica.com/.
These websites allow you to search for the perfect spot-whether you’re looking to camp in a tent, an RV, or a lodge. You can even search for campgrounds near a specific park or one that you can bring your boat to. So, if you’re planning a trip across country, you can map out your route and reserve your campsites along the way! And, if you’re planning on getting away more than once, you may want to consider joining a camping club for additional information and discounts, such as http://www.campclubusa.com/.
Selecting (and Laying Out) Your Campsite
When picking the perfect spot for your camper or tent, consider the following tips:
Water and restrooms-Chances are, you’ll be walking to the water faucet and restrooms throughout the day (and sometimes in the middle of the night). So make sure you know where they’re located and try to situate your campsite so that you have a short, easy walk to them. Nothing’s worse than walking all the way across the campground or across rough, difficult terrain multiple times a day.
High and dry-Make sure you know where the low-spots are…and avoid them when setting up your equipment. Otherwise, you may wake up to water in your tent or a large puddle surrounding your camper when it rains. You’ll also be more comfortable if you find a relatively flat spot, so you can avoid the awful “sleeping-bag slide” towards the bottom of your tent or camper.
Cooking and cleaning-Don’t just setup and settle in…make a layout plan for your campsite. Where will you cook…is it far enough away from dry leaves and twigs so your fire won’t get out of control? Where will you eat…is it close to the campfire/stove? Where will you hang clothes to dry…is it out of the way enough so that people won’t accidently walk into the clothesline at dusk? Thinking through the “workflow” of your campsite before you set up can help alleviate stress and frustration later on.
Fun in the…shade-All too often we associate camping fun with the sun. But there may come a time when you just want to relax in the shade. In addition, you may want to keep your tent or camper cool. So look for a spot with a few shade trees…and try to determine where the shade will fall at key times-like noon and early evening-so you know where to set up your chairs and other equipment.
Garbage detail-A clean campsite is a happy campsite. After all, you don’t want to find yourself overrun with insects and small critters simply because you didn’t dispose of last night’s supper. So bring plenty of garbage bags, keep them sealed after use, and haul them to the garbage can at regular times throughout the day.
Final Thoughts
To make sure you-and your campground neighbors-enjoy your outdoor adventures, follow these final thoughts on campground etiquette:
• Don’t feed the wildlife. That will only cause problems for you and/or future campers.
• Clean up your campsite throughout your stay. And do a final sweep before you leave to make sure you’ve removed all your garbage.
• Only burn wood. Everything else should either be recycled or disposed of in the appropriate place.
• Keep all your food in airtight containers/bags…and store them away from your camper or tent to make sure you don’t attract unwanted “visitors” from nature.
• Only cook in a safe place away from your tent/camper and away from dry leaves or twigs that may catch fire.
• Keep your pets on a leash and your kids within sight. Your campground neighbors will appreciate it and everyone will be able to enjoy the outdoors.
• Buy firewood at the campsite. Many Departments of Natural Resources suggest this tip because it helps prevent campers from introducing unwanted pests that aren’t indigenous to the area.
• Keep an eye on the weather. If a storm is approaching, take the appropriate precautions.
• Respect your neighbors. That means following posted quiet hours and keeping the volume down between dusk and dawn.
By following these tips, you’ll be able to enjoy the outdoors all summer long…whether you’re vacationing in your own backyard or halfway around the country. Happy camping!

Q&A: Bull Versus Bear?

QUESTION: Why are animal names used to describe action in the Stock market?
ANSWER: The terms “Bull” and “Bear” are used because of the way those animals attack. Bulls attack using an upward thrusting motion with their horns, and Bears attack by moving their powerful claws in a downward motion. So an upward market is termed a Bull market, while a downward market is called a Bear market.
These concepts are important to home loan rates because a Bear market could help Bond prices and home loan rates improve a bit more, as some of the money from Stock sales finds its way into the Bond market, including Mortgage Bonds. On the other hand, a Bull market will be at the expense of some of the recent improvements that Bonds and home loan rates have enjoyed.
The reality is, Mortgage Bonds have looked a lot like a lottery winner recently, since Bond prices really should be much lower, and home loan rates much higher. But Mortgage Bonds are catching every lucky break – from the situation in Greece…to the declining Euro…to the correction in the Stock market. It’s all going in the favor of Mortgage Bonds…for now.
But the Bond market’s good fortune may not last very long – so be sure to give me a call if I can help explain the current rate situation and how it might benefit you.

The material contained in this newsletter has been prepared by an independent third-party provider. The material provided is for informational and educational purposes only and should not be construed as investment, financial, real estate and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is not without errors.
As your Trusted Advisor, I always want to make sure you are clear on all details of the home financing process. If you or someone you know are interested in purchasing or refinancing a home, give me a call today!
In the unlikely event that you no longer wish to receive these valuable market updates, please USE THIS LINK or email: curtis@kcmortgageplanner.com
If you prefer to send your removal request by mail the address is:
Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated. Mortgage Success Source, LLC does not grant to the recipient or distributor a license to any content, features or materials in this email. You may not distribute, download, or save a copy of any of the content except as otherwise provided in our Terms and Conditions of Membership, for any purpose.

Curtis Schartz, Certified Mortgage Planner, Pulaski Bank Home Lending, Overland Park, Kansas City, Lee’s Summit, Olathe, Leawood, Lenexa, Independence, Liberty, Parkville, Gladstone, Shawnee.

In This Issue

Last Week in Review: Fed members did a lot of talking…find out what they’re saying and what it means for home loan rates.
Forecast for the Week: Inflation, housing, and manufacturing reports are ahead. Plus, will the Euro show signs of stabilization?
View: Travel safely with these tips from Kiplinger.com on avoiding travel scams.

Last Week in Review

“ACTIONS SPEAK LOUDER THAN WORDS,” or so the popular saying goes. But the words from various Fed members on the actions they feel need to be taken are getting pretty loud. And what could all this potential action mean for home loan rates? Read on to learn more.
There has been growing debate among Fed members about when to begin raising the Fed Funds Rate. What is the Fed Funds Rate? It’s the lending rate banks charge each other for the use of overnight funds, and it is used as a base rate that many other lending rates are based on, for consumer and business loans. A higher Fed Funds Rate tends to slow economic activity, as it means the cost of borrowing to finance a purchase will be higher, while a lower rate helps to stimulate activity, a ripple effect that expands into all sectors of the economy. As you can see in the chart below, the Fed Funds Rate is currently at a range of 0.0-0.25%, and it has been this low for over a year to help stimulate our economy and move us from recession to recovery.
———————–
Fed Funds Rate

If the Fed raises the Fed Funds Rate too soon, it could slow economic activity and cause a “double dip” recession. However, if the Fed waits too long to raise the Fed Funds Rate, inflation could result…and inflation concerns were a big reason for all the Fed chatter last week. Remember, inflation is the arch enemy of Bonds and home loan rates.
With mounting debt in the US and concerns that US debt will overtake GDP by 2012 – as well as the problems in Europe – there are many factors the Fed needs to consider before taking action. For instance, last week Fed Chairman Ben Bernanke said that the Unemployment Rate is likely to remain high for a while and he noted that the Fed “can’t wait until unemployment is where we’d like it to be” before tightening credit, or inflation could too easily get out of control. That said, recent reports like May’s Jobs Report and Retail Sales Report – which showed the first monthly decline since September 2009 – indicate that our economic recovery is still fragile at the moment. This means the Fed won’t want to act too quickly, either.
The next Fed Meeting is June 22-23rd, and while the Fed will most likely not raise the Fed Funds Rate at this time, more and more Fed members are expressing concerns about the current very accommodative monetary policy in place. Although home loan rates are not tied to the Fed Funds Rate, I’ll be watching this situation very carefully as it continues to unfold.
In addition, Bonds and home loan rates have benefitted lately from the situation in Europe, as global investors have sought the safe haven of our US Bonds. However, as the Euro’s freefall is finally showing some signs of stabilization, traders and investors can be very fickle in unwinding or reversing these trades pretty quickly. This could reverse the improvement we’ve seen in home loan rates, and we saw a sign of that last week. Bonds and home loan rates ended the week a bit off their best levels of the week…but are still incredibly low overall.
If you or anyone you know would like to take advantage of the exceptional opportunity that exists in the home loan marketplace at this point in history, please don’t hesitate to call or email. Or forward this newsletter on to anyone you think may benefit as well!
PLANNING A VACATION IS AN ACTION MANY OF US TAKE DURING THE SUMMER. CHECK OUT THE MORTGAGE MARKET GUIDE VIEW BELOW FOR TIPS FROM KIPLINGER FOR AVOIDING TRAVEL SCAMS.
Forecast for the Week

There will be plenty of inflation news for the Fed to gather this week, ahead of its meeting later this month. First, there’s Wednesday’s Producer Price Index, which measures inflation at the wholesale level, which will be followed by Thursday’s Consumer Price Index. As mentioned above, inflation is the arch enemy of Bonds and home loan rates, so it will be important to see what these reports reveal.
Housing, manufacturing, and job news are also in store this week, with Wednesday’s Housing Starts and Building Permits Reports (which give us an update on the health of the new construction sector of the housing market) and Thursday’s Philadelphia Fed Report (which gives us an update on the manufacturing sector).
We’ll also have another weekly Initial Jobless Claims Report. Initial Jobless Claims numbers have remained stubbornly high. The most troubling numbers in last week’s report are the additional 5.13M people claiming EUC (Emergency Unemployment Compensation), which are benefits lasting longer than 26 weeks, up to 99 weeks in total.
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 have rallied in the last few months, helped by the uncertainties in Europe. But remember, traders are fickle, and stabilization in Europe could bring an end to this rally. I’ll be watching closely to see what happens this week.
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The Mortgage Market View

Six Travel Scams to Avoid
All of these deals are too good to be true.
By Cameron Huddleston, Kiplinger.com
The summer travel season is almost here. If you’re looking for deals, make sure you don’t become the victim of a scam when trying to score a bargain. I spoke with SmarterTravel.com contributing editor Ed Perkins to find out which scams are most common and what you can do to avoid them. Here’s his list:
1. Phony airline tickets
How it works: A Web site or travel agency offers a deal better than anyone else’s, won’t accept credit cards and instead demands direct transfer of funds. What you get is a plane ticket that’s worthless.
How you can avoid this scam: Don’t deal with an outfit you’ve never heard of. See our list of the 28 best travel sites for legitimate companies. Don’t purchase airline tickets or any travel accommodations through a group that won’t accept a credit card. If you have a dispute with a merchant — for example, you were sold a phony plane ticket — you may have an easier time working out a solution if you paid with a credit card.
2. Pay now for future travel
How it works: You’re approached to enroll in a club that will enable you to take future vacations for an upfront fee of thousands to tens of thousands of dollars. After enrolling, you try to book a vacation but are told that the location or time period you want is unavailable. Then you might be asked for more money to gain access to more upscale spots that would be available.
How to avoid this scam: Unless you know someone who participates in a particular program and is happy with the service, stay away from these clubs. Even if your friend recommends a club, do some research of your own. See Resources to Help You Check Out a Company.
3. Travel like a travel agent
How it works: You receive a promotion in the mail or e-mail telling you that you can travel like a travel agent or sell travel from your home. The group purports to be a large travel agency that will provide back-office support while you sell travel packages. For a fee (usually $495 or $4,900), you’ll receive training and a travel agent ID card that you can use when making reservations to get a special rate.
How to avoid this scam: “There’s hardly an airline or hotel that doesn’t know about these phony IDs,” Perkins says. Even legitimate travel agents have a tough time getting discounts on airfare. Toss the promotion in the trash or hit “delete.”
4. No-ticket event packages
How it works: A tour operator offers a package for a big event, such as the Super Bowl, but doesn’t actually have tickets to the event.
How to avoid this scam: Ask the tour operator if it has event tickets in hand. Of course, the representative could lie. So it’s best to buy through an organization you know.
5. Phony insurance
How it works: A travel agent sells you a “protection plan” that’s supposed to reimburse you if you have to cancel your trip. The policy, however, is unlicensed and you won’t get your money back.
How to avoid this scam: Make sure the product you’re being sold really is a licensed insurance policy. You can see a list of licensed travel insurance companies at the U.S. Travel Insurance Association site. See The Case for Travel Insurance to learn more about what travel insurance covers. You can compare policies at InsureMyTrip.com.
6. “We will sell your timeshare”
How it works: Groups charge an upfront fee to sell your unwanted timeshare. “The bottom line is they don’t,” Perkins says.
How to avoid this scam: Avoid any group that promises to sell your timeshare for a fee (other than cheap listing fee). If you have a timeshare you just can’t unload, consider posting on Craigslist with an offer to give away your timeshare for free to anyone who will take over the commitment.
Reprinted with permission. All Contents © 2010 The Kiplinger Washington Editors. www.kiplinger.com.
________________________________________
Economic Calendar for the Week of June 14 – June 18
Date ET Economic Report For Estimate Actual Prior Impact
Tue. June 15 08:30 Empire State Index Jun 20.0 19.11 Moderate
Wed. June 16 10:30 Crude Inventories 6/12 NA -1.83M Moderate
Wed. June 16 09:15 Industrial Production May 0.7% 0.8% Moderate
Wed. June 16 09:15 Capacity Utilization May 74.2% 73.7% Moderate
Wed. June 16 08:30 Producer Price Index (PPI) May -0.4% -0.1% Moderate
Wed. June 16 08:30 Core Producer Price Index (PPI) May 0.1% 0.2% Moderate
Wed. June 16 08:30 Building Permits May 655K 610K Moderate
Wed. June 16 08:00 Housing Starts May 655K 672K Moderate
Thu. June 17 08:30 Jobless Claims (Initial) 6/12 NA 431K Moderate
Thu. June 17 08:30 Consumer Price Index (CPI) May -0.1% -0.1% HIGH
Thu. June 17 08:30 Core Consumer Price Index (CPI) May 0.1% 0.0% HIGH
Thu. June 17 10:00 Index of Leading Econ Ind (LEI) May 0.4% -0.1% Low
Thu. June 17 10:00 Philadelphia Fed Index Jun 17.0 21.4 HIGH

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

As your trusted advisor, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.

In the unlikely event that you no longer wish to receive these valuable market updates, please USE THIS LINK or email: curtis@kcmortgageplanner.com

If you prefer to send your removal request by mail the address is:

Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated. Mortgage Success Source, LLC does not grant to you a license to any content, features or materials in this email. You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.

Curtis Schartz, Certified Mortgage Planner, Pulaski Bank Home Lending, Overland Park, Kansas City, Lee’s Summit, Olathe, Leawood, Lenexa, Independence, Liberty, Parkville, Gladstone, Shawnee.

In This Issue

Last Week in Review: Stock market teeters on the verge of becoming either a correction…or an “official” Bear market.
Forecast for the Week: A fully loaded plate of economic news is in store, including reads on housing and consumer attitudes.
View: How you can “insure” a smart and safe vacation this summer.
Last Week In Review

IT’S A SHOWDOWN…THE BULLS VS. THE BEARS. But we’re not talking about the Chicago Bulls who were recently knocked out of the NBA playoffs. We’re talking about the Bull Market that Stocks have enjoyed over the past months…that is now slipping back lower.
So why are these animal terms used to describe action in the Stock market anyways? The terms “Bull” and “Bear” are used because of the way those animals attack. Bulls attack using an upward thrusting motion with their horns, and Bears attack by moving their powerful claws in a downward motion. So an upward market is termed a Bull market, while a downward market is called a Bear market.
Last week, Stocks saw a sharp thrust downward, with prices down more than 10% from their peak. But that doesn’t mean it’s a Bear market just yet. Instead, the drop can be seen as a “correction”, if prices recover and resume their uptrend. A correction can be quite healthy, and help a Bull market sustain its strength. But here’s the trick: if the market drops 20% from its peak, it’s officially considered a Bear market. That means every Bear market was once potentially just a correction. And so the debate rages on. Is this a good time to buy – because you believe it’s a correction and prices will move much higher? Or is this a time to sell, before the correction turns into a Bear market? The answer should become clearer over the next few days, as the market’s direction takes hold.
Waiting in the wings are Bond prices and home loan rates… A Bear market could help Bond prices and home loan rates improve a bit more, as some of the money from Stock sales finds its way into the Bond market, including Mortgage Bonds. On the other hand, a correction back to a Bull market will be at the expense of some of the recent improvements that Bonds and home loan rates have enjoyed.
The reality is, Mortgage Bonds have looked a lot like a lottery winner recently, since Bond prices really should be much lower, and home loan rates much higher. But Mortgage Bonds are catching every lucky break – from the situation in Greece…to the declining Euro…to the correction in the Stock market. It’s all going in the favor of Mortgage Bonds…for now. But the Bond market’s good fortune may not last very long – so be sure to give me a call if I can help explain the current rate situation, and how it might benefit you.
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BULL MARKETS THRUST UPWARD…WHILE BEAR MARKETS SWIPE DOWNWARD

Despite the sharp sell-off in Stocks, the markets did receive some good news last week on the inflation front. The Producer Price Index (PPI) was reported lower than expectations for the month of April, and the more closely followed Consumer Price Index (CPI) fell to report the first month-over-month decline since March of 2009. And when volatile food and energy prices were removed from the equation, the annual Core index came in at its lowest level since January 1966. Those numbers appear to show that inflation is subdued – and with oil prices significantly lower from where they were a few weeks ago, there will even be more downward pressure on headline inflation in the next report.
But the reality is that inflation will eventually begin to rear its ugly head – and once that happens, inflation can accelerate rather quickly. China recently reported a spike in inflation – and last week, the UK saw surprisingly higher inflation numbers being reported as well. So the Fed – and the markets – will have to continue to keep close tabs on inflation in the US.
WHILE YOU CAN’T CONTROL IF THE BULLS OR BEARS WILL WIN THE NEXT ROUND IN THE MARKETS…THERE ARE SOME THINGS YOU CAN CONTROL. FOR EXAMPLE, CHECK OUT THE MORTGAGE MARKET GUIDE VIEW BELOW FOR TIPS ON “INSURING” A SMART AND SAFE VACATION THIS COMING SUMMER.
Forecast for the Week

There’s a very full load of economic reports on tap this week, including fresh news on the health of the housing industry. After last week’s reports on Housing Starts and Building Permits in April, we’ll see reports on Existing Home Sales right away Monday morning and New Home Sales on Wednesday.
We’ll also discover how consumers feel about the economy with a report on Consumer Confidence on Tuesday, followed by the Consumer Sentiment Index on Friday. Both reports have risen lately, indicating that consumers feel better about the present and future economic conditions. The markets will be watching to see if that trend continues in this week’s reports.
The manufacturing sector of the economy will also be in the spotlight this week. Wednesday brings the Durable Goods Orders report, which measures new orders placed and is considered a leading indicator of manufacturing activity. That report will be followed by the Chicago PMI on Friday. This report surveys more than 200 Chicago purchasing managers about the manufacturing industry and is a good indicator of overall economic activity.
And if that wasn’t enough, we’ll also see more inflation news this week. First, the Gross Domestic Product (GDP) and GDP Chain Deflator for the first quarter will be released on Thursday. The Chain Deflator is a key inflation measure included in the GDP Report. And since inflation is the archenemy of Bonds and home loan rates, this report could be a market mover. Unlike the Consumer Price Index that was released last week, the Chain Deflator has the advantage of not being a fixed basket of goods and services, so changes in consumption patterns or the introduction of new goods and services will be reflected in the Chain Deflator. Then, one day after the Chain Deflator comes out, we’ll see the Personal Consumption Expenditures report on Friday. This report measures price changes in consumer goods and services, and is considered the Fed’s favorite gauge on inflation. After last week’s better-than-expected inflation news, the markets will definitely be watching these reports.
Rounding out the week, we’ll also see reports on Personal Income and Personal Spending this Friday.
But that’s not all…in addition to all those reports, the government will auction off $42 Billion of 2-years on Tuesday, $40 Billion of 5-years on Wednesday, and $31 Billion of 7-years on Thursday. These auctions may move the markets depending on how they are received.
Oh, not to mention that the news coming out of Europe may once again add to the market’s volatility here at home.
That’s a very full helping of potentially market moving activity. But you can count on me to be here and watching very closely. And 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.
Mortgage Bonds have improved over the last few weeks, as Stocks have undergone their move lower. I’ll be watching closely to see if Bonds…and home loan rates…can continue to improve in the week ahead.
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The Mortgage Market View

“Insuring” a Smart and Safe Vacation
Summer is right around the corner, and that means many people are starting to plan some kind of summer getaway.
When planning your fun-filled itinerary, the last thing you want to do is worry about any financial loss that might occur as a result of a missed flight, an injury or illness, lost baggage, or any other unforeseen incident. To ensure your peace of mind while away from home, many companies provide several different types of traveler’s protection plans to help ease the burden.
Without insurance, a traveler can lose nonrefundable deposits and prepayments that can add up to hundreds, or even thousands, of dollars. A good, comprehensive travel insurance plan will often reimburse a traveler for all pre-paid, nonrefundable expenses for a covered loss.
Here are some general types of coverage you may want to consider before heading out for this summer’s vacation:
Travel Arrangement Protection – This covers you in case of trip cancellation, interruption, or travel delays (these can include inclement weather, lost or stolen passports, quarantine, hijacking or natural disaster).
Medical Protection – Just because you have health insurance at home, the moment you set foot on foreign soil or even set sail on a cruise, many health plans are considered null and void, so be sure you get travel medical protection to cover emergency medical expenses, such as illness and accident expenses, and emergency medical transportation to the nearest medical facility.
Baggage Protection – Not only do you want coverage for lost, stolen or damaged baggage, but many plans offer reimbursement for the purchase of essential items if baggage is delayed.
Worldwide Emergency Assistance – If traveling outside of the country, make sure you purchase a policy that covers international emergencies. This can include emergency cash transfer assistance, legal assistance, and lost travel documents assistance.
The cost of travel insurance is based, in most cases, on the value of the trip and the age of the traveler. Typically, the cost is 5-7 percent of the trip cost. Like most every other type of insurance, be it automobile, medical, or homeowner’s, you hope you never need to use it. But it can be a relief to have it when you do need it.
The bottom line is: Before embarking on your next trip, do your homework! Talk to your insurance agent – or call me for a recommendation – and learn more about all the different insurance options available to you, so you can make the best choice for your peace of mind!
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Economic Calendar for the Week of May 24 – May 28
Date ET Economic Report For Estimate Actual Prior Impact
Mon. May 24 10:00 Existing Home Sales Apr 5.6M 5.4M Moderate
Tue. May 25 10:00 Consumer Confidence May 58.5 57.9 Moderate
Wed. May 26 08:30 Durable Goods Orders Apr 0.9% -0.3% Moderate
Wed. May 26 10:00 New Home Sales Apr 420K 411K Moderate
Wed. May 26 10:30 Crude Inventories 5/22 NA 0.162M Moderate
Thu. May 27 08:30 Jobless Claims (Initial) 5/22 NA NA Moderate
Thu. May 27 08:30 Chain Deflator Q1 0.9% 0.9% Moderate
Thu. May 27 08:30 Gross Domestic Product (GDP) Q1 3.3% 3.2% Moderate
Fri. May 28 09:45 Chicago PMI May 62.1 63.8 HIGH
Fri. May 28 10:00 Consumer Sentiment Index (UoM) May 73.3 73.2 Moderate
Fri. May 28 08:30 Personal Income Apr 0.5% 0.3% Moderate
Fri. May 28 08:30 Personal Spending Apr 0.3% 0.6% Moderate
Fri. May 28 08:30 Personal Consumption Expenditures and Core PCE Apr NA 0.1% HIGH
Fri. May 28 08:30 Personal Consumption Expenditures and Core PCE YOY NA 1.3% HIGH

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

As your trusted advisor, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.

In the unlikely event that you no longer wish to receive these valuable market updates, please USE THIS LINK or email: curtis@kcmortgageplanner.com

If you prefer to send your removal request by mail the address is:

Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated. Mortgage Success Source, LLC does not grant to you a license to any content, features or materials in this email. You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.

Curtis Schartz, Certified Mortgage Planner, Pulaski Bank Home Lending, Overland Park, Kansas City, Lee’s Summit, Olathe, Leawood, Lenexa, Independence, Liberty, Parkville, Gladstone, Shawnee.

In This Issue

Last Week in Review: Markets experienced huge swings in wild rollercoaster ride.

Forecast for the Week: This week will bring reports on trade, consumer sentiment and retail sales, and market-moving Treasury Auctions – all against a backdrop of continued uncertainty in Europe.

View: Saving and spending wisely with budgets that make sense.

Last Week In Review

“You bring me up and down!” While Janet Jackson was singing about love and relationships, investors around the world could surely relate during last week’s push and pull of wildly erratic markets. And we could be set up for an encore performance in the week ahead as anxiety persists in the European financial system.

The drama began on Monday when news of a pending bailout package for Greece sent Bonds lower, as investors pulled out of this “safe haven” and started looking toward stocks.

The very next day Stocks were back down, and Bonds were pushed up and out of their trading range, as 40,000 Greeks took to the streets to protest details of the bailout plan.

Capping off the week of volatility was Thursday afternoon’s Stock Market freefall scare, during which the Dow plummeted 998 points then recouped more than 600 points – all in the span of 15 minutes.

Thursday’s mysterious event, characterized as a “near-panic”, may have been caused in part by a wave of electronically submitted sell orders being executed at a mind-boggling pace. Remember, a majority of trading in the markets is done by computer. With Stock prices down significantly, many computer triggers for sell orders were hit. These triggers began executing sell orders at “market price.” With the enormous flood of market sell orders coming in, bidders pulled back, so there were very few bids to satisfy the sell orders. In such situations, the computer will keep seeking out the next available bidder in an effort to fill the order…no matter how low that bid is. One extreme example was the trading of Accenture (NYSE: ACN) stock, which went from $40 down to $0.14 (yes, 14 cents), then came all the way back to close at $41.09.

The Bond market, which generally has an inverse relationship to Stocks, responded to these tug-of-war pressures and events with exaggerated ups and downs, as seen in this week’s bond chart below.

This kind of tug-of-war makes the market very volatile – and underscores why it is more important than ever to work with a true mortgage professional who understands the market.

Counteracting some of the international angst last week was some positive domestic data and increasing sentiment that the US economy is improving.

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The Stock market’s erratic behavior frustrated traders and investors last week.

In the end, strong domestic economic data, like Friday’s better than expected official Jobs Report, was overshadowed by the drama in Europe and received less fanfare than it deserved.

According to the Labor Department, 290,000 jobs were created in April, well ahead of estimates for 187,000 new job creations. The increase was the biggest rise since March 2006. Overall, non-farm payroll employment has expanded by 573,000 since December, with the vast majority of the growth occurring during the last two months.

Despite the job growth, the Unemployment Rate ticked up from 9.7% to 9.9%. The main reason was an increase in the labor force of 805,000. That’s because unemployed individuals who do not look for a job for four weeks are removed from the labor force. When those people move back into job search mode, they are counted again – which can cause the Unemployment Rate to rise even when more jobs are being created.

OVERALL, THE ECONOMY IS SHOWING SIGNS OF A RECOVERY. BUT IT’S STILL IMPORTANT TO SAVE, SPEND, AND BUDGET WISELY. CHECK OUT THE MORTGAGE MARKET GUIDE VIEW BELOW TO LEARN MORE ABOUT BUDGETS THAT MAKE SENSE.

Forecast for the Week

The markets will open on the heels of Friday’s late night meeting of euro zone countries. There, leaders signed off on a support package for Greece, pledged to take steps to stem the spread of a “systemic” debt crisis and scheduled an emergency Sunday meeting of all 27 European Union finance ministers in hopes of quelling more turmoil on Monday.

It will be interesting to see how emerging details of their plan to create a European stabilization mechanism will affect the markets in the days ahead.

On the economic report front, this week will start out slowly. In fact, the first major economic report will be Wednesday’s Balance of Trade reports on exports and imports. Remember, a negative balance of trade – or a deficit – occurs when imports surpass exports. Rising deficits can be reflective of increased consumption, which can be a sign of a strengthening economy.

On Thursday, we will get another look at Initial Jobless Claims, which came in slightly above expectations last week but was still 7,000 lower than the previous week. The markets will be watching this report to see if the trend lower continues.

The week caps off on Friday with a host of reports on Industrial Production, Capacity Utilization, Consumer Sentiment and the big report on April’s Retail Sales.

In addition to these reports, and the continuing European saga, this week’s Treasury Department auctions may also affect the markets. The government will auction $38 Billion in 3-Year T-Notes on Tuesday, $24 Billion in 10-Years on Wednesday, and $16 Billion in 30-Year Bonds on Thursday.

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, Mortgage Bonds broke out of their trading range but the markets saw huge swings by the end of the week.

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Chart: Fannie Mae 4.5% Mortgage Bond (Friday, May 7, 2010)

The Mortgage Market View

Spending and Saving Wisely

Click the Link to view the latest MMG Weekly Video

Last Week In Review

They say “the only constant is change…”, yet last week’s meeting of the Federal Open Market Committee ended without any major changes…no change to the Fed Funds Rate, and no change to the now-famous verbiage in their Policy Statement, stating that rates will remain low for an “extended period” of time. While the Fed does not control home loan rates, what does all this mean for those seeking home financing in the months ahead? Read on for details.

There are two important things to note about last week’s Fed meeting. First, despite strong earnings, a stronger Stock market, and better consumer confidence and housing numbers, St. Louis Fed President Thomas Hoenig remains the lone dissenter to the verbiage in the Policy Statement on keeping rates low for an “extended period.” He feels that there is a strong risk of inflation ahead…and that the Fed needs to prepare the markets for the eventual hikes that will be coming to the Fed Funds Rate. When the Fed does indeed change this language, it will signal that the Fed has a consensus on inflation being a threat…and since inflation is the arch-enemy of home loan rates, the change in verbiage will cause rates to move higher.
In addition, the Fed made no mention in their Policy Statement about selling any of their Mortgage Backed Security (MBS) holdings – and the added supply coming into the market will also cause home loan rates to rise. That said, the Fed may have discussed the topic during the meeting, and it could come up when the Meeting Minutes are released. There is growing concern that if the Fed doesn’t begin selling some of these MBS holdings by 2011 that additional asset bubbles may arise. It’s likely that the Fed will look to sell a meaningful chunk by year end, and this will be yet another headwind for home loan rates during the coming year.
If you want to see if you can benefit from the current low-rate environment before these items adversely impact home loan rates, please give me a call or send me an email…and as always, please feel free to pass along this newsletter to a friend, coworker or family member that might benefit.
In other news, Consumer Confidence rose sharply in April, to its highest reading since September 2008. This number is important because the more confident that consumers feel…the more likely it is that they will help fuel the economy. Also, the Commerce Department’s Gross Domestic Product Report indicated that the economy grew for the third straight quarter, despite the report coming in slightly below estimates. Inflation readings within the report remained tame, giving the Fed cover to keep interest rates low, with inflation appearing to be subdued. But inflation concerns can arise quickly, and although the Fed is not acting just now…we can be sure they are watching very carefully.
Greece was still the word last week, as Standard & Poor’s Bond rating agency downgraded the debt of Greece to “junk” status. The lack of confidence in Greece’s ability to repay their debt has pushed yields on their 2-Year Notes up to a whopping 18% to try and incent investors – and by way of comparison, our own US 2-Year Notes are yielding just over 1%! This is why credit downgrades are such a concern, and why the warnings from Moody’s about the US overspending must be taken very seriously.
There has been much greater volatility in the Bond market lately, with large price swings in both directions. It’s no coincidence that the volatility increased just after the Fed exited their buying program. While concerns about Greece have caused some investors to lose some confidence in European debt instruments, and move their holdings over to US securities, which are viewed as a safer bet, the situation is fluid and there’s no telling how much and for how long Bonds and home loan rates will benefit from the situation. Overall – the mix of news and market activity benefitted Bonds and home loan rates last week, improving to better levels over the week prior.
LIBERTY AND FREEDOM FOR ALL IS ALWAYS A CHANGE IN THE RIGHT DIRECTION! CHECK OUT THE MORTGAGE MARKET GUIDE VIEW TO LEARN ABOUT THE HISTORY OF “CINCO DE MAYO”, BEING CELEBRATED THIS WEDNESDAY!

Forecast for the Week

Two important reports bookend the week ahead, and hopefully both will show changes in a good economic direction.
Monday’s Personal Income and Personal Spending Reports will give us a look at the Core Personal Consumption Expenditure (PCE), which is the Fed’s favorite gauge of inflation. Rest assured the Fed will be watching this report very closely, as it could impact their decisions on rates and Policy Statement verbiage, as we discussed.
Thursday will bring another Initial Jobless Claims Report. At this stage in the economic recovery, the weekly Initial Jobless Claims readings we are seeing are still pretty high, which suggests that businesses are both reluctant to hire and are looking to trim overhead.
And the big enchilada of employment news wraps up the week, as April’s Jobs Report is due for delivery on Friday morning. Last month’s report showed that 162,000 jobs were created in March, making it the biggest one-month increase in three years. Additionally, there were upward revisions to January and February, which brought the last two months’ net job losses to near zero. But it’s not time to break out the party hats just yet…last month’s report also showed that the official Unemployment Rate remained steady at 9.7%, and when factoring in the “underemployed”, including people who accepted part-time work because full-time work is simply not available, the rate of unemployment overall rose from 16.8% to 16.9%. This report will be very important to watch, as the labor market is key to our economic recovery.
Remember this rule of thumb: Weak or negative economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong or positive economic news normally has the opposite result.
As you can see in the chart below, the instability in Greece and the Fed’s decision to keep rates low for an extended period of time gave Bonds a boost above a key technical level. But remember, volatility is the name of the game at the moment, and things can change quickly. I’ll be watching closely to see in which direction Bonds and home loan rates move this week – and always welcome a call or email from you if I can help answer any questions!
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Chart: Fannie Mae 4.5% Mortgage Bond (Friday, April 30, 2010)

The Mortgage Market View

Celebrating Cinco de Mayo…and Its Connection to the United States
This Wednesday marks the celebration known as Cinco de Mayo, or “May 5th”, in Spanish. Although many people have heard of this holiday – and even join in the celebrations with gusto – plenty of folks are not aware of what this holiday is all about. And most people don’t realize that the event being commemorated may have actually played an important role in shaping the United States that we know today.
Let’s take a look at what this holiday is about, and have even more reason to celebrate Cinco de Mayo – as well as liberty and freedom – this Wednesday, May 5th.
What Does Cinco de Mayo Commemorate?
Many people believe that Cinco de Mayo is the day that recognizes Mexico’s independence from Spain. To set the record straight, that conquest happened on September 15th, 1810. Cinco de Mayo, on the other hand, celebrates an event that took place over 50 years later.
On May 5, 1862, the Mexican cavalry, under the command of Texas-born General Zaragosa, defeated the French at the battle at Puebla, a city 100 miles east of Mexico City.
The French army, having not suffered a defeat in nearly 50 years, landed in the port of Vera Cruz and headed toward the capital city with a specific mission. Fearless of any opponent, the French sought to overthrow the capitol and gain control of Mexico, even bringing along a Hapsburg prince to oversee the would-be empire.
So…What’s the Connection to the United States?
The goal of France’s leader, Emperor Napoleon III, was to gain proximity to the US, in hopes of supplying the Confederate Army with support in their fight against the North…as he desired to sustain the division within America.
To America’s benefit, the undersized Mexican cavalry used their knowledge of the terrain to defeat the powerful French army. This victory enabled the Northern States to continue to build the greatest army in the world at that time. Fourteen months later, the North soundly defeated the Confederate Army in the battle at Gettysburg, thus ending the Civil War. Union troops were subsequently rushed to the Texas/Mexican border to help expel the French from Mexico.
Cinco de Mayo is rightfully celebrated in both the US and Mexico – and it’s a great occasion to honor freedom and liberty.
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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 May 03 – May 07
Date ET Economic Report For Estimate Actual Prior Impact
Mon. May 03 08:30 Personal Income Mar 0.3% 0.0% Moderate
Mon. May 03 08:30 Personal Spending Mar 0.6% 0.3% Moderate
Mon. May 03 08:30 Personal Consumption Expenditures and Core PCE Mar NA 0.0% HIGH
Mon. May 03 08:30 Personal Consumption Expenditures and Core PCE YOY NA 1.3% HIGH
Mon. May 03 10:00 ISM Index Apr 60.0 59.6 HIGH
Wed. May 05 10:00 ISM Services Index Apr 56.1 55.4 Moderate
Wed. May 05 08:15 ADP National Employment Report Apr 30K -23K Moderate
Thu. May 06 08:30 Jobless Claims (Initial) 5/01 440K 448K Moderate
Thu. May 06 08:30 Productivity Q1 2.4% 6.9% Moderate
Fri. May 07 08:30 Average Work Week Apr 34.0 34.0 HIGH
Fri. May 07 08:30 Hourly Earnings Apr 0.1% -0.1% HIGH
Fri. May 07 08:30 Non-farm Payrolls Apr 187K 162K HIGH
Fri. May 07 08:30 Unemployment Rate Apr 9.7% 9.7% HIGH

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

As your trusted advisor, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.

In the unlikely event that you no longer wish to receive these valuable market updates, please USE THIS LINK or email: curtis@kcmortgageplanner.com

If you prefer to send your removal request by mail the address is:

Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated. Mortgage Success Source, LLC does not grant to you a license to any content, features or materials in this email. You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.

Curtis Schartz, Certified Mortgage Planner, Pulaski Bank Home Lending, Overland Park, Kansas City, Lee’s Summit, Olathe, Leawood, Lenexa, Independence, Liberty, Parkville, Gladstone, Shawnee.

Last Week in Review

“IF WE HAD NO WINTER…THE SPRING WOULD NOT BE SO PLEASANT.” 17th-Century poet Anne Bradstreet’s words ring true not only for the seasons, but also for last week’s Retail Sales numbers. Just days before Sunday’s “spring forward” into Daylight Savings Time, the retail sector looked to be unfreezing and showing at least a little spring in its step.

As you can see in the chart below, Retail Sales for February were reported last Friday at 0.3%, which was better than the previous month’s reading and much better than the -0.2% expected. Despite the good news, however, we need to keep in mind that it will be subject to future revisions – just like we saw in Friday’s report, in which last month’s decent 0.5% reading was revised sharply lower to just 0.1%.

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Chart: Retail Sales (Month-Over-Month)

The better-than-expected Retail Sales was good news for the economy, but it could also lead to inflation trouble ahead. Remember, inflation is the archenemy of Bonds. Just last week, fears of inflation in China pressured Bonds around the globe. And here in the US, a number of Fed members have already mentioned inflation as an increasing concern.

And it isn’t just Fed officials who have been warning against inflation; investors around the globe are having increased doubts. Massive debt and massive balance sheet expansion – combined with near zero interest rates for a long period of time – will no doubt conjure a recipe for inflation.

The question is this: Once inflation rears its ugly head…will the Fed have the courage and the will to kill the monster by tightening policy, amidst enormous political pressure not to do so? As you’ll see in the Forecast section below, the next Fed meeting is taking place this week, and the Policy Statement released on Tuesday will garner intense scrutiny.

WHILE THE ECONOMY HAS BEEN SHOWING SOME SIGNS OF RECOVERY LATELY, MANY FOLKS STILL NEED HELP IMPROVING THEIR OWN FINANCIAL PICTURES. CHECK OUT THE MORTGAGE MARKET GUIDE VIEW ARTICLE BELOW FOR A VIDEO FEATURING FIVE WAYS TO GET OUT DEBT FASTER.

Forecast for the Week

There’s a lot of news on tap for this week, starting off right away Monday with the Empire State Index, Industrial Production and Capacity Utilization. These reports will give us a look at the manufacturing sector – and any bad news could certainly shake up the markets.

We’ll also see an update on the health of the new construction sector of the housing market, with reports on Building Permits and Housing Starts coming on Tuesday.

Perhaps the biggest news of the week will be the inflation news carried in the Producer Price Index on Wednesday and the Consumer Price Index on Thursday. As stated above and in the chart below, hints of inflation fears have the potential to negatively impact the markets – and can quickly drive Bond prices lower and home loan rates higher. The news from these reports will be even more interesting, since they come just after the Fed’s Monetary Policy and Fed Funds Rate decision on Tuesday…and many members of the Fed have lately been expressing their growing concerns about inflation. The Policy Statement following the Fed meeting is always dissected carefully – but with the rising fears of the inflation genie escaping the bottle, this Statement takes on even more significance.

Remember: Overall, 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, inflation fears pushed Mortgage Bonds below two key technical levels last week…and those levels now may become “ceilings of resistance” for Bonds, making it harder for them to improve.

Chart: Fannie Mae 4.5% Mortgage Bond (Friday Mar 12, 2010)

The Mortgage Market View…

5 Ways to Get Out of Debt Faster

Making smart choices with your money is always a good idea, but it’s especially important if you are working to become debt free. Check out this video from www.Kiplinger.com for 5 ways to get out of debt faster.

The Week’s Economic Indicator Calendar

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 March 15 – March 19
Date ET Economic Report For Estimate Actual Prior Impact
Mon. March 15 08:30 Empire State Index Mar 23.45 24.91 Moderate
Mon. March 15 09:15 Capacity Utilization Feb 72.3% 72.6% Moderate
Mon. March 15 09:15 Industrial Production Feb 0.0% 0.9% Moderate
Tue. March 16 08:30 Building Permits Feb 602K 622K Moderate
Tue. March 16 08:30 Housing Starts Feb 570K 591K Moderate
Tue. March 16 02:15 FOMC Meeting .25% .25% HIGH
Wed. March 17 10:30 Crude Inventories 3/13 NA 1.43M Moderate
Wed. March 17 08:30 Producer Price Index (PPI) Feb -0.2% 1.4% Moderate
Wed. March 17 08:30 Core Producer Price Index (PPI) Feb 0.1% 0.3% Moderate
Thu. March 18 08:30 Core Consumer Price Index (CPI) Feb 0.1% 0.2% HIGH
Thu. March 18 08:15 Consumer Price Index (CPI) Feb 0.1% 0.2% Moderate
Thu. March 18 08:30 Jobless Claims (Initial) 3/13 450K 462K Moderate
Thu. March 18 10:00 Index of Leading Econ Ind (LEI) Feb 0.2% 0.3% Low
Thu. March 18 10:00 Philadelphia Fed Index Mar 18.0 17.6 HIGH

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
As your trusted advisor, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.
In the unlikely event that you no longer wish to receive these valuable market updates, please USE THIS LINK or email: curtis@kcmortgageplanner.com
If you prefer to send your removal request by mail the address is:

Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated. Mortgage Success Source, LLC does not grant to you a license to any content, features or materials in this email. You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.

Curtis Schartz, Certified Mortgage Planner for Pulaski Bank Home Lending, Overland Park, Kansas City, Leawood, Lees Summit, Lenexa, Olathe, Shawnee, Blue Springs, Liberty, Parkville, Gladstone, Independence.

Last Week in Review

“WORKIN’ NINE TO FIVE – WHAT A WAY TO MAKE A LIVIN’…” Dolly Parton. But full time employment is nothing to gripe about these days – last week’s Jobs Report showed that there are millions of people who would love to be working full time…or even working at all. The labor market continues to struggle, though it has shown improvement from its worst levels.

As you can see in the chart below, the Jobs Report for February showed 36,000 jobs lost in February, which was better than the 68,000+ job losses that were expected. Adding to the positive tone of the report were upward revisions to the prior two month’s reports showing 35,000 fewer jobs lost. However – helping the numbers were 15,000 temporary census worker hires made by the government. Without these, actual job losses would have exceeded 50,000 for February.

———————–
Chart: Nonfarm Payrolls

Additionally, the Unemployment Rate remained at 9.7%, better than expectations of a rise to 9.8%. But a deeper look beyond the headlines of the report showed what many consider to be the Real Unemployment Rate to be at 16.8%, a rise from last month’s 16.5%.

This rate includes both discouraged workers – those who are no longer seeking work at this time – and those who are working part-time that would rather be “workin’ nine to five” with full time employment, but are forced to accept part time out of necessity to earn whatever they can. And just last month, another nearly 500,000 people accepted part time work, citing economic reasons for doing so.

In related news, Productivity rose by 6.9% during the Fourth quarter of 2009, up from the previous reading of 6.2%. This is an encouraging report, because during an economic recovery, it is normal to see a pick up in productivity before seeing fresh job creations. Think about it – companies may start to see their business pick up, but before making the commitment of hiring new workers, they will squeeze more productivity out of their present staff. Job creations may be coming – but it appears that the labor market recovery will be slow going.

Bonds attempted to rally through the week, but ultimately, improvements in Stocks and positive economic news caused Bonds and home loan rates to end the week around the same levels as where they began.

ALERT! Two important deadlines are on the horizon: the Fed will stop buying Mortgage Backed Securities at the end of March (which means home loan rates may soon be on the rise), and the Homebuyer’s Tax Credit is due to expire on April 30. If you or any of your friends, family members, neighbors or colleagues want to learn more about how you can benefit from the current situation, give me a call or email – I’d be happy to explain more about the opportunity at hand.

WHILE THE LABOR MARKET HAS BEEN STRUGGLING FOR AWHILE, THE GOOD NEWS IS THAT CERTAIN CAREER PATHS ARE DEFINITELY ON THE RISE! CHECK OUT THIS WEEK’S MORTGAGE MARKET GUIDE VIEW FOR MORE DETAILS.

Forecast for the Week

It will be a quiet week when it comes to economic reports, but with the healthcare debate heating up in Washington and the Fed’s Mortgage Backed Securities Purchase program winding down, there are still plenty of events that could impact the markets and home loan rates.

On the economic report front, Thursday brings another Initial Jobless Claims Report. Last week’s Initial Jobless Claims met expectations, but the big news was that the report showed 5.7M people claiming EUC (Emergency Unemployment Compensation) benefits, which was an increase of over 207,000 from the prior week.

On tap for Friday is the Retail Sales Report, and as the most-timely indicator of broad consumer spending patterns, it is important to see how the numbers come in. In fact, last week’s Personal Consumption Expenditure report revealed that during January, consumers made less, saved less and spent more – but it remains to be seen if the increase in spending will show up in the Retail Sales Data.

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 made some improvements during the week, but the gains were capped by a rally in Stocks and positive economic data. I’ll be watching closely as always during the coming week – and please feel free to contact me anytime to learn more, or discuss your own financial and home loan situation.

Chart: Fannie Mae 4.5% Mortgage Bond (Friday Mar 05, 2010)

The Mortgage Market View…

5 Careers You May Not Have Considered…But Perhaps Should!

In the wake of last week’s employment news, now is an ideal time to take a look at careers that are expected to grow in the coming months and years. Recently, US News & World Report released the results of its study on the Best Careers in 2010. The good news is there are a lot of jobs that are on the rise – including a number of careers that many people may not have considered.

If you or someone you know is looking to make a career move in today’s challenging work environment, here are 5 careers to consider.

Meeting Planner

Overview: Despite the economic downturn, companies still need to do business…and often that means bringing people together from around the country and the world. According to US News & World Report, the need for meeting planners is expected to grow 16% by 2018.

Education and training: To get a career as a meeting planner, you’ll probably need a bachelor’s degree. But the good news is that US News & World Report found that real-world experience “may be the most important factor in getting a job.”

Security System Installer

Overview: This job entails installing security and fire alarm systems. In addition to dealing with electronics, installers are also expected to deal with local building codes, blueprints, and even clients and homeowners. As US News & World Report stated, from 2008 to 2018, the opportunities in this field are expected to climb 25%.

Education and training: While some employers may want an associate’s degree or work experience, the good news is that a number of employers will train on the job. Candidates, of course, should have an interest and basic understanding of electronics.

Plumber

Overview: Think about it. Every home and every building needs a plumber when it’s built…not to mention down the road if water problems are encountered. Combine that with the fact that many of today’s plumbers will likely retire in the next 10 years, and it’s easy to see why this career is expected to grow more than 15% before 2018.

Education and training: If you’re interested in a career as a plumber, you have a few options. You can enroll in technical or community college – or look for employers who are willing to provide on-the-job training. Finally, you can enroll in an apprenticeship program that combines classroom and on-the-job training.

Firefighter

Overview: The good news is that the need for firefighters is expected to increase about 19% according to US News & World Report. The flip side is that there will probably be a lot of competition for those jobs, since the job provides stable work with a pension.

Education and training: If you’re in the right place at the right time, you can get a job as a firefighter with only a high school degree. But, with the competition mentioned above, you’ll have a better chance with additional training and education – such as an associate’s degree, EMT training, or a college degree.

Technical Writer

Overview: If you’ve ever read a how-to manual or operating instructions, you already have some idea of what technical writers do for a living. As you might imagine, the job requires you to understand and translate complex ideas and information. However, you may not have imagined that technical writing isn’t just limited to writing. Today’s technical writers often deal with graphic design, video, and multimedia software to communicate complex ideas. If these aspects sound good to you, this may be a field worth considering – especially with an expected job growth of 18% before 2018.

Education and training: For this job, you’ll need a college degree. But you don’t necessarily need a degree in journalism or technical writing (although, it would help). The reality is that technical writers can specialize in fields such as business, science, and engineering. So if you have a degree in one of those fields and if you’re good at communicating complex ideas, you may already be qualified. An interest and experience in multimedia software as well as a course or an online certificate in technical communication can help increase your chances of landing a job.

Those are just 5 of the jobs identified by US News & World Report as the best careers for 2010. If they don’t suit your interests, you may want to take a look at the entire list on the US News & World Report website. Then, take steps to transition to your new career.

The Week’s Economic Indicator Calendar

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 March 08 – March 12
Date ET Economic Report For Estimate Actual Prior Impact
Wed. March 10 10:30 Crude Inventories 3/6 NA 4.03M Moderate
Thu. March 11 08:30 Jobless Claims (Initial) 3/6 NA 469K Moderate
Thu. March 11 08:30 Balance of Trade Jan -$40.8B -$40.2B Moderate
Fri. March 12 08:30 Retail Sales Feb -0.1% 0.5% HIGH
Fri. March 12 08:30 Retail Sales ex-auto Feb 0.0% 0.6% HIGH
Fri. March 12 10:00 Consumer Sentiment Index (UoM) Mar 73.8 73.6 Moderate

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
As your trusted advisor, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.
In the unlikely event that you no longer wish to receive these valuable market updates, please USE THIS LINK or email: curtis@kcmortgageplanner.com
If you prefer to send your removal request by mail the address is:

Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated. Mortgage Success Source, LLC does not grant to you a license to any content, features or materials in this email. You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.

Curtis Schartz, Pulaski Bank Home Lending, Lees Summit, Overland Park, Kansas City, Olathe, Parkville, Liberty, Shawnee, Leawood, Lenexa.

Last Week in Review

“OPINION HAS CAUSED MORE TROUBLE ON THIS LITTLE EARTH THAN PLAGUES…” Voltaire. And lately, there have been a lot of opinions about inflation being voiced from Fed officials, respected economists, and the media. But what does all this talk really mean for our economy and home loan rates? Here’s what you need to know.

On Friday, the Consumer Price Index (CPI), which measures the prices US consumers pay, came in lower than expected for January. The chart below shows the year-over-year headline CPI at 2.6%, below expectations of 2.8%. What’s more, when volatile food and energy are removed from the equation, the “Core” Consumer Price Index was actually negative – and the last time that happened was 28 years ago.

———————–
Chart: Consumer Price Index

So, if the CPI Report shows that inflation is currently non-existent, why are so many people expressing concern? The reality is that the factors which are currently restraining inflation pressures could easily swing the other way.

In fact, Kansas City Fed President Thomas Hoenig recently said, “Fiscal policy is on an unsustainable course. The US Government must make adjustments in its spending and tax programs. It is that simple. If pre-emptive corrective action is not taken regarding the fiscal outlook, then the United States risks precipitating its own next crisis.” And part of the crisis Mr. Hoenig is warning of is the possibility of hyperinflation, which occurs when prices rise so quickly that a currency becomes worthless.

Hoenig recently reminded us that he has a framed picture of a 500,000 German mark bill in his office…which would have purchased a home in 1921, but due to sudden inflation, wouldn’t purchase a loaf of bread just two years later. Adding to the inflation talk, recent Produce Price Index Reports, which measure inflation at the wholesale level, have shown a trend higher in wholesale inflation. January’s report, for example, was significantly higher than expected, due to rising energy costs.

Also chiming in with an opinion, Philadelphia Fed President Charles Plosser made some interesting comments regarding monetary policy and sales of assets that the Fed currently owns. Mr. Plosser stated that the Fed should begin to sell off their stockpile of Mortgage Backed Securities (MBS) as the economic recovery gains strength. With the Fed MBS buying program ending soon, and the Fed now potentially turning into a seller of MBS, Bond prices and home loan rates will very likely worsen over time. (More on this in the special “Video View” below…don’t miss it!)

In other news, the Empire State Manufacturing Index came in higher than expected and up from January’s reading. The report also showed business activity picking up and business leaders forecasting better economic conditions in the coming months. In addition, Housing Starts for January came in better than expected and at the highest level since July, thanks in large part to the extension of the Homebuyer Tax Credit.

Bond prices were unable to improve after falling below an important technical level this week, and as a result, home loan rates ended the week worse than where they began.

MANY PEOPLE ARE ASKING FOR OPINIONS ABOUT WHERE HOME LOAN RATES ARE HEADED…AND WHY. CHECK OUT THIS WEEK’S MORTGAGE MARKET GUIDE VIEW FOR A SPECIAL VIDEO THAT EXPLAINS HOW AND WHY HOME LOAN RATES MOVE…AND WHAT IT MEANS RIGHT NOW.

Forecast for the Week

While it’s hard to say what opinions might be uttered this week, there will definitely be plenty of news in store.

We’ll get a look at the housing market with Wednesday’s New Home Sales Report and Friday’s Existing Home Sales Report. It will be interesting to see if these reports are looking more positive, as many buyers are working to take advantage of the Homebuyer’s Tax Credit before it expires this spring. If you want to learn more about this Tax Credit and how it might help you or someone you know – don’t hesitate to get in touch with me, I can share all the details and important timelines.

Also this week, we’ll get several reads on the health of the economy with Thursday’s Durable Goods Report – which gives us an update on consumer and business buying behavior on big ticket items that last for an extended period of time – and Friday’s Gross Domestic Product Report, which is the broadest measure of economic activity.

Tuesday’s Consumer Confidence Report and Thursday’s Initial Jobless Claims Report will also be important to watch. Last week’s Initial Jobless Claims and Continuing Claims numbers were higher than expected, showing that the labor market is still struggling. The bottom line is that while some of the recent economic reports have had encouraging signs, the economy needs to create jobs and regain consumer confidence before any positive opinions on the economy will become reality.

And as if it won’t be a week jam packed full of opinions already, Fed Chairman Ben Bernanke will be weighing in with some thoughts of his own, as he testifies before Congress on Wednesday and Thursday.

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 ended the week below an important technical level. I’ll be watching closely to see if Bonds can reverse course and move higher this week, which would result in an improvement for home loan rates.

Chart: Fannie Mae 4.5% Mortgage Bond (Friday Feb 19, 2010)

The Mortgage Market View…

Rates May Be Headed Up Soon…But Why?

You’ve heard a lot over the last several months about historically low home loan rates…but lately, you’ve probably been hearing the buzz that interest rates may be heading up in the near future, due in part to the Fed ending their purchases of Mortgage Backed Securities.

All of this begs the question: How and why do rates move…and what is happening right now?

The answer involves a number of factors and can seem complex. But it doesn’t have to be!

To help you understand how interest rates move, take a look at this easy to understand video. You’ll learn what the Fed has been doing to keep rates low, as well as the connection between interest rates and Mortgage Backed Securities.

Take a look at the following video now for an easy explanation:

How Rates Move – and What it Means Right Now

The Week’s Economic Indicator Calendar

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 February 22 – February 26
Date ET Economic Report For Estimate Actual Prior Impact
Tue. February 23 10:00 Consumer Confidence Feb 55.0 55.9 Moderate
Wed. February 24 10:30 Crude Inventories 2/19 NA 3.08M Moderate
Wed. February 24 10:00 New Home Sales Jan 355K 342K Moderate
Thu. February 25 08:30 Jobless Claims (Initial) 2/20 460K 473K Moderate
Thu. February 25 08:30 Durable Goods Orders Jan 1.5% 0.3% Moderate
Fri. February 26 08:30 Gross Domestic Product (GDP) Q4 5.3% 5.7% HIGH
Fri. February 26 09:45 Chicago PMI Feb 59.0 61.5 Moderate
Fri. February 26 10:00 Consumer Sentiment Index (UoM) Feb 74.0 73.7 Moderate
Fri. February 26 10:00 Existing Home Sales Jan 5.50M 5.45M Moderate
Fri. February 26 08:30 GDP Chain Deflator Q4 0.6% 0.6% HIGH

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
As your trusted advisor, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.
In the unlikely event that you no longer wish to receive these valuable market updates, please USE THIS LINK or email: curtis@kcmortgageplanner.com
If you prefer to send your removal request by mail the address is:

Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated. Mortgage Success Source, LLC does not grant to you a license to any content, features or materials in this email. You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.

Curtis Schartz, Certified Mortgage Planner, Pulaski Bank Home Lending, Lees Summit, Overland Park, Kansas City.

Last Week in Review

“IT AIN’T OVER TIL IT’S OVER.” Yogi Berra. And whether you find those words deeply wise or simply puzzling…The Fed has told us repeatedly that their massive purchasing program of Mortgage Backed Securities is just about over – and this translates to home loan rates rising in the near future.

As you can see in the chart below, the amounts of Mortgage Backed Securities the Fed is purchasing are slowly dwindling, as the program is set to wrap up by March 31st, and are clearly trying to ration out the remaining portion. Last week, the Fed purchased $11 Billion in Mortgage Backed Securities, which leaves them with $66 Billion to spend out of their original $1.25 Trillion allotment. So about 95% of the total has already been spent and has purchased about 3 out of every 4 home loans during the past year. When such a large buyer leaves the market, it is very likely that prices will worsen.

This is very important because as the Fed has less money to last through the remaining months of the program, their ability to keep home loan rates low via their purchasing power will wane. And those who can take advantage of currently low home loan rates do not wait, as the clock on these historically low rates is ticking.

———————–
Chart: The Fed’s Purchase of MBS (By Month)

Also last week, Fed Chairman Ben Bernanke provided a speech on a number of topics, perhaps the most important of these being switching the Fed’s benchmark from the commonly watched and monitored Fed Funds Rate, to a new benchmark of “interest paid on excess reserves”. Banks are required to keep money on reserve with the Fed and may, from time to time, have an excess in those reserves, which the Fed can pay interest on. Since the Fed Funds Rate is only a “target rate”, banks can still lend money to other bank overnight at their own negotiated rate. Sometimes near the end of the trading day, banks have been lending their excess reserves out overnight for a rate that differs from the Fed Funds Rate, but is higher than interest on those reserves from The Fed. This undermines the Fed’s ability to set a reliable benchmark.

The Fed wants to fix this by using the amount of interest they pay as the new benchmark, since the Fed has total control of this rate, which should be right at or just under the Fed Funds Rate.

There is one major take-away from this discussion – it appears that the Fed is getting their ducks in a row as they prepare to push interest rates higher. And when they do increase rates, the Fed does not want any obstacles that may undermine their plan.

AND SPEAKING OF OBSTACLES THAT COULD CAUSE PROBLEMS…WATER DAMAGE CAN WREAK HAVOC ON YOUR HOME AND YOUR FINANCES, AND IS ESPECIALLY IMPORTANT TO WATCH OUT FOR DURING COLD WINTER MONTHS. CHECK OUT THE MORTGAGE MARKET VIEW ARTICLE BELOW FOR TIPS ON PROTECTING YOUR HOME!

Forecast for the Week

The financial markets will be closed on Monday in observance of Presidents Day, and in terms of economic reports, there won’t be much action until midweek. On Wednesday, we’ll get a look at the health of the housing industry with reports on Housing Starts and Building Permits for January.

It will be interesting to watch the housing reports over the next several months, as many people are acting to take advantage of currently low home loan rates that may be on the rise soon, as well as the potential of a juicy tax credit. Remember – the Homebuyers Tax Credit is only available on homes purchased with a contract date before April 30th, and the transaction must settle by June 30th.

We’ll also get an update on inflation this Thursday, as the Producer Price Index will be released. This index measures price changes for wholesalers, and prefaces the more important Consumer Price Index coming on Friday, which measures changes in the price paid by consumers for goods and services. These reports are both particularly important, as the Fed will be watching very carefully for any signs of inflation. If inflation begins to rise, the Fed will have no choice but to begin to hike rates to fight off the dangers that inflation could pose to our economy.

In addition to those reports, we’ll get our weekly look at employment through the Initial Jobless Claims data. Last week’s report showed some encouraging signs, but there is still a long way to go before we’ll see stabilization in the Unemployment Rate and some meaningful job creation. At the moment, 6.3 Million people remain unemployed for over six months – an increase of 5 million since the start of the recession in December of 2007. To reach the White House’s projection of a 6% unemployment rate by 2015, the US would need to create 225,000 jobs per month, every month, for the next five years. But that kind of long term job growth has never been seen before. The year 2006, was the only year in US history that had job gains average over 225,000. But that was for just a single year – doing it for five years may be too much of a stretch.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bond prices and home loan rates improve, while strong economic news normally has the opposite result.

As you can see in the chart below, Bond prices fell early last week due to weak results from the Treasury auctions, but were able to rally towards the end of the week. When Bond prices are moving higher, home loan rates are improving – so I’ll be watching out to see if the current ground can be held. If you have any questions about how home loan rates move – and if an opportunity exists that would benefit you – please don’t hesitate to call or email me.

Chart: Fannie Mae 4.5% Mortgage Bond (Friday Feb 12, 2010)

The Mortgage Market View…

Keeping Your Home Safe from Water Damage

Preventing water damage in your home is important at any time of year, but particularly in the winter when the cold weather can wreak havoc on plumbing. Here are some tips to make sure your water bill is as low as it should be…and that your home is as safe and dry as it needs to be:

Pay attention to your bill: Major fluctuations in water usage from one month to the next could mean that you have a problem. Taking just a few minutes to look at your bill each month could make a big difference in your wallet!

Inspect appliances: While much of your home’s plumbing can be hidden behind walls and cabinets, most of your appliances that use water can be easily inspected for potential leaks. Each month, take the time to inspect areas around your water heater, dishwasher, refrigerator, washing machine, sinks, and toilets. If any hoses or seals appear old or damaged, replace them. Also, inspect and repair obvious caulking and tile grout damage. It’s a small price to pay for what could be expensive repairs later.

Inspect the sewer line: Clear away build-up and roots from around your sewer line. Obstructions in this area could create major plumbing problems in the future.

Check your water pressure annually: This is easier than it sounds. Simply purchase a pressure gauge and attach it to the hose faucet. Normal results should range from 45 to 65 pounds per square inch (psi). A reading above 65 psi is considered high and could lead to problems down the line.

Find and fix leaks quickly: Make a habit of checking the main fixtures regularly so that when something out of the ordinary occurs you will notice it and take action immediately. Sometimes, however, slow water leaks aren’t very obvious. A great way to discover hidden leaks is to look for stains in areas where water is often used. For example, if you see even small stains on the cabinet floors beneath the sink in the kitchen or bathrooms, you could have a problem. Warm spots in the floor or tiles could also be an indication of hidden water damage.

Before a vacation: The worst thing to come home to after a great vacation is major water damage. Consider turning off your water while you’re gone. For many homeowners there is a separate shut-off valve for the home that doesn’t affect your irrigation system.

The bottom line is that a little time and effort can make a big difference when it comes to keeping your home safe and dry, and your expenses at a minimum!

The Week’s Economic Indicator Calendar

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 February 15 – February 19
Date ET Economic Report For Estimate Actual Prior Impact
Wed. February 17 08:30 Building Permits Jan 615K 653K Moderate
Wed. February 17 02:00 FOMC Minutes 1/27 HIGH
Wed. February 17 09:15 Industrial Production Jan 0.8% 0.6% Moderate
Wed. February 17 09:15 Capacity Utilization Jan 72.6% 72.0% Moderate
Wed. February 17 08:30 Housing Starts Jan 580K 557K Moderate
Thu. February 18 08:30 Producer Price Index (PPI) Jan 0.8% 0.2% Moderate
Thu. February 18 08:30 Core Producer Price Index (PPI) Jan 0.1% 0.0% Moderate
Thu. February 18 10:00 Index of Leading Econ Ind (LEI) Jan 0.5% 1.1% Moderate
Thu. February 18 10:00 Philadelphia Fed Index Feb 17.0 15.2 HIGH
Thu. February 18 08:30 Jobless Claims (Initial) 2/13 430K 440K Moderate
Fri. February 19 08:30 Consumer Price Index (CPI) Jan 0.3% 0.1% HIGH
Fri. February 19 08:30 Core Consumer Price Index (CPI) Jan 0.2% 0.1% HIGH

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
As your trusted advisor, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.
In the unlikely event that you no longer wish to receive these valuable market updates, please USE THIS LINK or email: curtis@kcmortgageplanner.com
If you prefer to send your removal request by mail the address is:

Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated. Mortgage Success Source, LLC does not grant to you a license to any content, features or materials in this email. You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.

Curtis Schartz, Certified Mortgage Planner, Pulaski Bank Home Lending, Lees Summit, Overland Park, Kansas City, Olathe, Leawood, Liberty