Karl's Blog

Monday, April 28, 2008

Without any real news to sink our teeth into today, traders will be alert for anyone who sneezes the wrong way to decide which way to invest. With that being said, Warren Buffet spoke out today on how he not only believes that we are in a recession, but that it will be much more severe than most expected. When the world's richest man speaks, more people listen than those in the old EF Hutton commercials.  Oil is making the news as usual with the price per barrel creeping up once again to $120.  Bonds are doing pretty well today up 34 Bp for the day. With most investors now keenly eying Wednesday's rate decision, expect the market to move more on innuendo and suggestion until then. As always, if anything changes I will let everyone know.

Karl Menzer

435-849-0212

http://www.karlmenzer.com 

THE JOB MARKET

  Initial jobless claims dropped by 33,000 last week. Quite unexpected by analysts to say the least. The market reacted like it was the best news in weeks.... Which it was. With the four week average remaining at a high 369,500, and numbers dropping only as benefits end for the unemployed. With the number of layoff announcements this week, with AT&T announcing a 4,000 cut, many economists are waiting for the next round of unemployment data before calling it a soured market. Next week will have the latest unemployment numbers, and hourly earnings coming out, so keep an eye in the news for that.

BOND MARKET

Remember when bonds go down rates go up

The bond started off strong this week but took a turn for the worse this after some better than expected earnings reports came out from the likes of Yahoo and Ford Motors. Lower than expected unemployment also boosted the Dow and hurt the bond. The biggest bond and stock killer this week is once again OIL!!! With it tipping the $120 mark this week, and not showing signs of retreat (boy, you fire on one little boat) oil will continue to damage both markets. The bond has dropped past the 50 and 100 day moving average and is heading right for the 200 day moving average. If it breaks past that level of support, we can look at rates staying higher in the coming weeks.

HOUSING MARKET

  Sales of New homes fell to their lowest levels in 16 ½ years. Add to that existing home sales falling 2% last month and a 7.7% decline in value from last year, and you have some economists feeling that this may surpass the Great depression in housing issues.... I like to believe that Santa is real and that we will bounce back from this. Although 18% of homes for sale have negative equity, 82% still don't. To me that sounds like a pretty full glass. Locally we are down both in sales and sale price. Same month sales were not this low since 2004.

Rates have bounced around this week more than kids at a birthday party. Like them, all this up and down has left some with an upset stomach. I wouldn't be far off is I said that the first thing I do when I wake up is open my computer and see what the bond (and therefore rates) are going to do today. Just a 10 minute at the market happenings to see if I need to advise my clients to float and shop or lock and buy. With that being said, one of the frustrating side effects of this constant rate bounce is the risk of a client falling victim to another lender with a better rate. With constant changing guidelines and ever present shutdowns, it is more important than ever to pick a lender who is looking out for what the best is for the client. Changing lenders can not only add time to the loan process, but can also risk losing a loan all together. MI factors, along with new rate hits, new disclosures, and even programs ending can take a good transaction and kill it. I am not saying to use me, what I am saying is that a realtor or a borrower, it is more important than ever to make sure that first you have a competent lending agent, and then second make sure he has your best interest at heart.

Karl Menzer

http://www.karlmenzer.com

Thursday, April 24, 2008

It's a good market news day, which is pulling the bond down pretty hard. Durable goods orders came in better than expected today. Although most of it was defense related orders, investors looked at it as good news and ran with it. Other positive news was that Jobless claims dropped unexpectedly this week.  Analysts had expected the number to be close to 375,000, so when the number came in 33,000 lower, the market rallied and sold off those ever important bonds. The only bad news in the market today is that new home sales fell to the lowest levels in 16 years, down 8.5% from last Mont and 50% from last year. This in what should be the spring pick up time.  Currently the bond is down 50 Bp for the day, and as of 11:54 am I have started seeing re-prices for the worse. Rates are a bit higher today, so if you need to lock, I suggest that you do it now. If you missed the rate change, tomorrow is another day.

Karl Menzer

435-849-0212

http://www.karlmenzer.com

Wednesday, April 23, 2008

It takes real self control to not watch the bond constantly and today is no exception. Bond insurer Ambac reported a loss today of $1.6 billion. This was much worse than analysts expected and dropped their stock down to under $ 5 a share. They were $95 a year ago (ouch). Oil is becoming the main driving factor in the market today, with it almost reaching $120 a barrel yesterday before retreating back to the $117 range. The stock market is up a little over 20 points, which is helping pull the bond down drastically. Currently the bond is down 40 Bp, but seems to be finding support at the 50 and 100 day moving averages. With the March Durable Goods, Weekly Jobless Claims, and March New Home Sales reports all coming out tomorrow, and investors starved for any economic news, it looks like it's a float day today. As always, if anything changes, I will let you know.

Karl Menzer

435-849-0212

http://www.buyatooelehome.com

Tuesday, April 22, 2008

Existing home sales came in lower than economists expected today at 4.93 million. It was expected to be 4.95 million. The national median home price also dropped to $ 200,700, still not bad for U.S. Other news in the market is a mixed bag, with the most annoying economic news today being oil passing $118 a barrel.  Investors are working more from the DOW and oil today, and trading more on emotion than statistics.  The Bond is currently down, but has been up for most of the day today. The FHA 15 year is higher today than the 30 yr fixed, giving you more of an example of the current market volatility.  As always if anyone has any questions or comments, please feel free to call.

Karl Menzer

435-849-0212

Http://www.karlmenzer.com

Tuesday, April 22, 2008

Existing home sales came in lower than economists expected today at 4.93 million. It was expected to be 4.95 million. The national median home price also dropped to $ 200,700, still not bad for U.S. Other news in the market is a mixed bag, with the most annoying economic news today being oil passing $118 a barrel.  Investors are working more from the DOW and oil today, and trading more on emotion than statistics.  The Bond is currently down, but has been up for most of the day today. The FHA 15 year is higher today than the 30 yr fixed, giving you more of an example of the current market volatility.  As always if anyone has any questions or comments, please feel free to call.

Karl Menzer

435-849-0212

Http://www.karlmenzer.com

The most common questions I hear from clients is "do I need a down payment?" and "What do I qualify for?" There are still a number of options with Community development grants, Down payment assistance programs, VA, and Rural Housing in certain areas 100% is still possible.  Scores are more important, and good credit history is becoming a must, but it doesn't need to be perfect.  

The ratios on qualifying for a home are in the lines of 31/43 with the first number being how much of your monthly income is allowed to be used for paying your mortgage and the second number being how much of your monthly income can be used for your TOTAL monthly debt.  There is flexibility in the ratios depending credit score, amount of reserves work history, etc that can bring them up to as much as 50%.

The more important question isn't what you qualify for, but rather how much do you feel comfortable paying every month.  It amazes me the number of times that the two amounts vary by as much as $600 per month.  This is especially important for the first time homebuyer. What you may feel you can afford may be a fixer upper, but think of the equity you will have when you sell it. With the American dream becoming bigger than real life, it is important to keep perspective on having a home you can take the time to enjoy and working to afford the home you qualify for.  We're in Utah, a stone's throw from countless national parks, mountain trails, and some of the best powder in the world, it would be a shame to miss all of that.  For more information on how to qualify for a home loan or what you may need, please click o the link below.

Karl Menzer

435-849-0212

http://www.karlmenzer.com

Monday, April 21, 2008

With little in the lines of economic reports today, the bond is relying more on the stock market today. With Bank of America (the guys in the process of buying Countrywide) stating today that their profits fell 77% from last year, and 30% of economists feeling that the economy will shrink in the next year , the DOW is down over 80 points. This has had a positive reaction to the bond which is up 18 Bp for the day, and 28 Bp from when pricing came out. We are above the 50 and 100 day moving average. This is good as it is also above the level where it broke past the level of support last Thursday.  With the level of support looking like it will re-set on or above last week's level.  As always, if anything changes, I will let you know.

Karl Menzer

435-849-0212

http://www.karlmenzer.com

Friday, April 18, 2008

This has truly been a freaky Friday. With Citigroup posting a whopping $5.1 Billion First quarter loss, the DOW shot up 243 and took the bond down with it. What triggered this earnings loss to be good? Well most investors had already figured that they were going to tank, so since they were in line with expectations, the market felt it was good news. On the up and up, to bolster the DOW and further hurt the bond, Google posted a larger than expected increase in first quarter earnings. So it should be a down day for the bond.... And we were down more than 48 Bp up until about 12:15 mountain time when the bond erased all of the day's losses and actually turned positive. Who sneezed here? From what I can see, 3 Fannie Mae executives agreed to pay nearly $31.4 million in a settlement with the government over their roles in a 2004 accounting scandal.  It's much less than the government wanted, but shows that there is some accountability at the top. Although the bond is up a mere 4Bp form the opening bell, it is up 53 Bp from when pricing went out, allowing for 2 re-prices for the better today.  Keep em' crossed today as the day isn't over.

As always, if you have any questions, please feel free to call me at 435-849-0212

Karl Menzer

karl@karlmenzer.com

http://www.karlmenzer.com/