April 17 2006

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For the week of Apr 17, 2006 --- Vol. 4, Issue 16

Last Week in Review

It's Rabbit Season! No, it's Duck Season! Rabbit Season! Duck Season! Actually, it's EARNINGS SEASON...the time when publicly traded companies release their quarterly earnings results. This barometer of the health of corporate America and the stock market can set the tone for Fed action, stock prices and interest rates. The S&P 500 companies are on an unprecedented hot streak, with 16 consecutive quarters of double digit earnings growth. This is helping to put more money in the pockets of Americans, who have been spending that money faster than it has been coming in. That leads to inflation, and we know that higher inflation is bad for home loan rates. Since late January, rates on home loans are up about a half of 1%, pushing them to their highest levels in four years. So while rates are still very good, they are not as attractive as they were earlier in the year. And it isn't just wages that have inflation hunters on alert; oil prices hit historical highs as they flirted with $70 a barrel. This tells us that you can expect to pay $3 a gallon at the pump during the summer driving season. There are also concerns about nuclear developments in Iran. If the US launches any kind of preemptive strike, oil prices could jump another $20 a barrel. Interest rate volatility sure appears to be in season as well. And with all that is going on, don't expect that to change soon. Rates finished the week about 0.125% worse than where they began. YOU JUST NEED TO ASK A QUICK QUESTION, AND ALL YOU WANT TO DO IS GET A LIVE PERSON ON THE PHONE. BUT NOOOO, YOU HAVE TO GO HUNTING THROUGH A MAZE OF PROMPTS BEFORE YOU FIND OUT THAT THE HOLD TIME IS 12 MINUTES. IF THIS FRUSTRATION IS ALL TOO FAMILIAR TO YOU, THEN DON’T MISS THIS WEEK'S MORTGAGE MARKET VIEW FOR TIPS AND SHORTCUTS ON AVOIDING A TOUCHTONE TANTRUM.

Forecast for the Week

"Down, down, down in a burning ring of fire" is what Johnny Cash may have said about bond prices during the past two and a half months. And a quick look at the chart below shows why. Prices have been riding lower on a "down escalator" due to fears over inflation. This week the economic calendar is loaded for low hanging bears. The focus is on the latest data on inflation, and Traders will get a good look at it on both the wholesale and retail levels. Additionally, the Fed will release the minutes of its most recent meeting, which tells us how the Fed sees the inflation picture. If they are overly concerned, rates won't react well and you can expect more Fed hikes too. It looks as if volatility will remain in season. Chart: Fannie Mae 6.0% Mortgage Bond (Friday Apr 14, 2006)

The Mortgage Market View...

The latest credit card TV commercial says it all...The main character can't get a hold of a live person at his credit card company to answer a simple question on his statement. He tries in frustration, but continues through an almost endless series of prompts and silly questions. He has to shout his password, "big boy", in a crowded subway car because the machine can't hear him. Finally he gets a live person, but loses reception as the train enters a tunnel. Technology has come a long way and most innovations are great, but sometimes there can be a little too much of a good thing. And, most would agree that without human interaction, this technology can be nothing more than a frustrating, time consuming process. Just think about the last time you phoned an 800 number to check a balance or ask a quick question about a charge. You picked up the phone, dialed the number, and just wanted to connect with a human. But, before you knew it you found yourself tangled in a phone tree with a synthesized voice instructing you to press one for English, two to check a balance, three to obtain last payment date, four to blah, blah, blah, and never received the prompt for a human. So, you pressed any number on the phone pad hoping to connect with a human and just dug yourself a bit deeper in the tree. Well, there is a way to connect with a human. A frustrated group of volunteers, tired of the phone trees, have created a very helpful website. The website contains a database of "800" numbers for companies and helpful tips on how to connect with a human without raising your blood pressure, wasting your time, or getting lost in a phone tree. Simply go to www.gethuman.com and with just a few clicks of the mouse you can obtain a detailed list of "800" numbers and tips for each company listed on how to "get human" with a customer service representative. Presently the website has a database of about 400 companies (and growing) listed either alphabetically by company name, or you can search by type of business. The business directory has everything from credit card companies to utilities. So let's see how simple it really is. Say you want to phone American Express, just go to the www.gethuman.com site, lookup American Express, dial the 800 number, and follow the "Get Human" instructions to hit zero repeatedly and viola, it works! Additionally, after using this feature, you can quickly rate each company by clicking on the company name. This will allow "Get Human" to monitor the effectiveness of the express method and rate the overall customer service for other individuals to view.

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 April 17 – April 21 Date ET Economic Report For Estimate Actual Prior Impact

The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial services and other professionals only and is not intended for consumer distribution. 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, 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.