Final Update/ Week of October 26, 2009

Good Morning Everyone and Happy Friday! Boy, have we seen some volatility lately, as expected. The trend of the stock market seems to be downward, but the preliminary GDP reading yesterday gave the bulls reason to cheer and rally yesterday. By the end of the day, though, it seemed a little overdone. Newton told us that for every action there must be an equal and opposite reaction. Yesterday was the reaction from the day previous, and wow . . . today is the reaction from yesterday’s rally! The stock market is giving back almost everything it gained yesterday, and better yet, the credit markets have more than made up their losses of the day previous.

There were a slew of economic reports this morning for traders to digest, but none of them seemed to be able to fuel a rally for equities. Personal income and spending were basically in line with expectations – no surprises there. Chicago Purchasing Managers Index came in better than expected at a reading of 54.2, when analysts were looking for a number of 49. That’s good, but has no impact on the falling market today. The final reading of the Univ. of Michigan’s Sentiment Index was slightly better than anticipated, but again, nothing to prop the market.

Rates are better than yesterday’s, of course, but only slightly. We haven’t really seen the big swing in mortgage note offerings as investors played it safe when credit markets were improving early this week. Also, this is a Friday, so investors are rarely aggressive with rates, and there is little reaction from the last couple days of equaling moves in the markets. If the stock market can’t stem the losses, money will keep flowing to the credit markets and we may see some improved pricing. More than likely, investors will wait until Monday to get aggressive if the opportunity is still available.

Well, it is a beautiful Autumn day outside! And last day of the month . . . one would think this would be a good day to take the day off. So, I think I will. I will out all day on a previously scheduled day off. You can contact me on my cell phone if I can help you, but I won’t be in the office until Monday a.m. Have a terrific Friday, and a very restful and relaxing weekend!