Update #4/ Week of October 19, 2009

Good Morning Everyone and Happy Thursday! The stock market is relatively flat this morning. The Dow, which we typically quote, is being influenced by a few large players that work very well into the formula for the increase it is enjoying this morning. The other more broad based indices are flat after some aggressive selling in the last hour of trading yesterday. Lately we’ve been back to the last hour of trading wild swings that we saw earlier this year and last year. Credit markets are pretty much flat, too, just slightly to the negative side. Our pricing is less than ½ of an 1/8 worse in fee on our conforming 30 year fixed product.

The big earnings reports this morning that are having such a nice influence on the Dow comes from McDonald’s, AT&T, 3M and Travelers. McDonald’s reported a rise in sales globally and in the US. This should be no surprise as this is what economists call an “inferior good.” When money is tight, inferior goods prosper as those that would normally like to go out to the steak house can’t afford it. AT&T is benefitting from it’s partnership with Apple and it’s iPhones – 3.2 million new contracts for them this last quarter with the iPhone. These positive reports have to be compared to not so profitable reports from the likes of Amgen, eBay and Merck. Although these companies beat the street with their earnings, their outlook going forward is cautious.

The economic news releases this morning flash a mixed signal for traders, too. The Leading Economic Indicators report came out this morning with a rise in it’s index for the 6th straight month. It’s rise of 1.0% bested analysts’ expectations of .8% -- that’s good. We’re all ready for these indicators to start blossoming into real growth. Home prices fell .3% in August month-over-month, the first drop in 3 months. Analysts were expecting another increase of .3%. Initial jobless claims report was the real culprit for weakness in trading this morning as it showed an increase of those claiming jobless benefits for the first time. Experts were anticipating a number of 515K, but the actual number was 531K. Continuing claims stayed below 6M, although the week previous was revised to just over the 6M mark. Unemployment doesn’t seem to be dissipating.

With another day of flat rates, we’re going to keep ploughing through the files that we have here in process. We welcome a little break in new locks, just not too long of a break, please. The stock market continues to confound many as to it’s ability to hold on to gains over the last several months. We expect this strength to wane in the weeks to come. I will be in the office all day today. Call me here or email me if I can help you. Have a terrific Thursday!