Financial Update #2 of 5/ Week of August 24, 2009

Good Morning Everyone and Happy Tuesday! We had a pretty flat day yesterday in equity markets – only single digit moves in either direction in all 3 major indices. However, the credit markets had a very good day with the Feds continuing to purchase long term mortgage securities. Too bad we couldn’t get some carry through this morning. Equity markets are off to the races again with positive economic releases, and so far, credit markets are holding on with marginal losses. Today’s pricing on our 30 year conforming rate is back to where we were on Friday morning. We have recouped the .375 we lost in rebate over the weekend.

The S&P/Case-Schiller Home Composite 20-City Index for June came in with a year-over-year drop of 15.4% -- isn’t that great news? How exciting! Well, it is better than the 16.4% anticipated, so I guess in that respect it is good news. And . . . it is better than the 17% number reported for May. The broader Home Price Index came in with a much better improvement . . . 14.9% compared to the 19.8% expected. Obviously, this is giving all kinds of encouragement to stock traders who are touting the end of the recession. However, nobody seems to be addressing that pink 800 pound gorilla in the corner over there with the sign hanging around his neck that reads “Shadow Inventory.” Shadow Inventory is the multitude (nobody really knows how many) of foreclosed houses being held by the banks not yet released to the market. These will have to be sold off before a true recovery can start, so more than likely prices will keep falling, albeit not so quickly year of year (hopefully).

Also adding fuel to this morning’s equity rally is the Consumer Confidence Index report for August which came in with a reading of 54.1 – far above the anticipated number of 47.9 which was pretty much the number from July. The mighty spending force of consumers aren’t bringing their money to the stores, but they are confident about the future. OK, well, at least we feel good about tomorrow, even though we’re not quite ready to put our money where are hearts are.

Uncle Ben gets nominated for another term by our President. He’s done a pretty good job of steering us through the last several years and apparently we don’t want to upset the apple cart. Besides, who would want his job right now anyway?

I’ll be in the office all day today if you need me. Call me or better yet email me here and I’ll do my best to help you. Have a terrific Tuesday!