Update #3/ Week of May 17, 2010- ARA MELKONIANS

Good Afternoon and Happy Wednesday! Again, it all started last night in the Asian markets where the Hang Seng closed down 366 points. It continued in Europe in reaction to the news that Germany had put a stop to naked short selling (I’ve mentioned this before, if the traders want to sell their shorts that’s their business . . . but put some clothes on and quit running around naked!) without the consent of the rest of the EU. France and Germany both have showed signs recently of snubbing the EU system, and this is of grave concern to those who feel the whole union over there could fall apart.

Thus, European individual stock markets closed down anywhere from 2.5 to 3.0% almost straight across the board. US equity markets fell right out of the gate, with the Dow dropping almost 200 points in the first couple hours of trading today. We’ve since made up a portion of those losses, but still find ourselves in negative territory by double digits. The CPI for April was released this morning showing a decline of .1% -- similar to the PPI earlier this week. Again, deflation isn’t necessarily a good thing either, and there have been few times in our economy that we have even seen deflation – never in good times, of course. Core CPI was flat and probably didn’t provide much incentive to move the markets one way or the other, but seemed to have stopped the selling for the time being.

We learned this morning that mortgage delinquencies are on the rise once again. The first quarter of this year saw a rise to 10.1% from 9.5% the previous quarter. This economy continues to starve people out and apparently, more people are falling behind on their mortgages than ever before -- this is the highest reading in 30 years. As you can imagine, this report did nothing to help the equity markets and the sinking continued once again as soon as it was released.

Credit markets are rallying once again. Mortgage rates are improving steadily…this is the time to LOCK IT UP! Call me here or better yet email me if you need me. Have a terrific Humpday!