This past week has been amazing as stocks have fallen which has pushed the Bond market higher than we've seen at anytime this year. The fallout over Greece's failure to meet its debt obligations and the falling EU, has made the US Bond Market a safe place for investors to store their money.
What does all this mean to the mortgage business and your ability to use this as an opportunity save thousands of dollars? I'll try to explain! If you currently have a 30 year fixed rate mortgage, and have a some equity in your home, you could take your loan rate down to 4.5% and save thousands of dollars over the life of the loan, plus increase your net cash flow by not paying as much for your monthly home investment. Another thing, you may have...say 22 years left on your current 30 year loan and would enjoy having the property paid for sooner, you could take out a 15 year loan at 4% or less, depsnding on the market, knock off seven years off your payment schedule, and save a ton of money in interest! If you want to have the numbers on your particular situation then visit my website, www.joeharris.com or send me an email. There is not cost or obligation, be happy to help.
Friday, May 21, 2010
Sunday, May 16, 2010
A Day Cooking Ribs
When my son, Justin decided to drive home from Nashivlle, he asked if we could fire up the Big Green Egg and cook some ribs. Seems he has never seen me cook ribs on the Egg, and wanted to have some fun watching how I managed to do ribs which in his opinion, are the best he's ever had.
Although the day was rainy, we rolled the Egg under the overhang so we and the big cooker wouldn't get soaked. Since the BGE uses those natural wood charcoal chunks, and the temperature inside the grill will be kept at 225 degrees, there won't be too much smoke pouring into the house with the grill being so close. When I do ribs, I like to purchase those St. Louis style ribs as they have great taste, plus there just seems to be more meat on the bone! I take that membrane off the back by sliding a kitchen knife under the thin membrane, then grabbing hold and it will pull off pretty easily. This is a big help in the way the ribs taste and keeps them more tender.
Once we get the membrane off, I pat them dry, rub some olive oil over them, then use a good sprinkling of Jacks's Old South rib rub. I sometimes make my own, but Jack's Rub is as good as any I'll ever make, plus all I have to do is grab the container and start shaking. I'm pretty liberal with the rub too, futhermore, once the rub is covering the ribs, I use my hands and massage the mixture into the meat, then wrap them tightly in plastic wrap, stack them one on top of the other, and into the fridge they go for at least three to four hours, but most preferably overnight.
About 30 minutes before the ribs are to go inside the BGE, I let them rest outside the fridge so the meat will warm, but not quite to room temp. This way when cooked, you will see a smoke ring just inside the meat. This is supposed to be a sign of well cooked ribs, at least according to the guys who do championship ribs. Ok...now we have the Egg at 225 and the ribs go on the rack, with the plate setter in place. A "Plate Setter" is a ceramic covering which covers the hot coals and prevents the ribs from searing or burning. A good way to cook indirectly, which is what you want to go "low and slow."
I have a spray bottle which is filled with a liquid of apple juice, white vinegar, worchestershire, and Tobasco. This is sprayed onto the ribs every 30 minutes, which keeps the ribs moist so they won't dry out. The ribs are cooked about six hours, maintaining the 225 degree heat. During the last 30 minutes, I swab the meat with a bar bq sauce, then stack them one of top of the other, then rotate them about every seven or eight minutes so the sauce will carmalize. Once time is up, the ribs are taken out to let them rest about 15 minutes then the fun begins. I promise, you do ribs this way and you will love not only doing it (the cooking), but eating them will be an amazing, delicious, fun filled dinner!
Although the day was rainy, we rolled the Egg under the overhang so we and the big cooker wouldn't get soaked. Since the BGE uses those natural wood charcoal chunks, and the temperature inside the grill will be kept at 225 degrees, there won't be too much smoke pouring into the house with the grill being so close. When I do ribs, I like to purchase those St. Louis style ribs as they have great taste, plus there just seems to be more meat on the bone! I take that membrane off the back by sliding a kitchen knife under the thin membrane, then grabbing hold and it will pull off pretty easily. This is a big help in the way the ribs taste and keeps them more tender.
Once we get the membrane off, I pat them dry, rub some olive oil over them, then use a good sprinkling of Jacks's Old South rib rub. I sometimes make my own, but Jack's Rub is as good as any I'll ever make, plus all I have to do is grab the container and start shaking. I'm pretty liberal with the rub too, futhermore, once the rub is covering the ribs, I use my hands and massage the mixture into the meat, then wrap them tightly in plastic wrap, stack them one on top of the other, and into the fridge they go for at least three to four hours, but most preferably overnight.
About 30 minutes before the ribs are to go inside the BGE, I let them rest outside the fridge so the meat will warm, but not quite to room temp. This way when cooked, you will see a smoke ring just inside the meat. This is supposed to be a sign of well cooked ribs, at least according to the guys who do championship ribs. Ok...now we have the Egg at 225 and the ribs go on the rack, with the plate setter in place. A "Plate Setter" is a ceramic covering which covers the hot coals and prevents the ribs from searing or burning. A good way to cook indirectly, which is what you want to go "low and slow."
I have a spray bottle which is filled with a liquid of apple juice, white vinegar, worchestershire, and Tobasco. This is sprayed onto the ribs every 30 minutes, which keeps the ribs moist so they won't dry out. The ribs are cooked about six hours, maintaining the 225 degree heat. During the last 30 minutes, I swab the meat with a bar bq sauce, then stack them one of top of the other, then rotate them about every seven or eight minutes so the sauce will carmalize. Once time is up, the ribs are taken out to let them rest about 15 minutes then the fun begins. I promise, you do ribs this way and you will love not only doing it (the cooking), but eating them will be an amazing, delicious, fun filled dinner!
Thursday, May 6, 2010
Mortgage Bonds Continue Rally
The latest push for bonds moving higher has been fueled by a Stock market selloff where investors are parking the sale proceeds into Bond instruments. Additionally, the US is being viewed as a safer place to invest than Europe, which is evidenced by the Euro hitting a 14 month low agaist the Dollar. Much of this European discontent comes from the situation in which Greece finds itself. With riots and now deaths grabbing the headlines, as Greek workers do not want to accept some of the cutbacks needed to help Greece get on firmer economic footing, which is a conditional reuirement for the ECB and IMF's bailout, it is no wonder the US is becoming a safe place to park dollars.
The jobless claims were announced today, which were reported at 444,000, a touch above the expected 440,000. Continuing Claims, or individuals receiving unemployment benefits lasting up to 26 weeks, fell by 59,000 to 4.6M. Here is the kicker though, as those who have maxed out their Continuing Claims benefits can claim emergency benefits, which can extend them to a total of 99 weeks of benefits! Do you realize that is one year and nine months being able to get paid buy us tax payers for not working! I'm not trying to be hard here, but in my humble opinion, a person can get a job and will find work if he/she is not being paid to not work!
The jobless claims were announced today, which were reported at 444,000, a touch above the expected 440,000. Continuing Claims, or individuals receiving unemployment benefits lasting up to 26 weeks, fell by 59,000 to 4.6M. Here is the kicker though, as those who have maxed out their Continuing Claims benefits can claim emergency benefits, which can extend them to a total of 99 weeks of benefits! Do you realize that is one year and nine months being able to get paid buy us tax payers for not working! I'm not trying to be hard here, but in my humble opinion, a person can get a job and will find work if he/she is not being paid to not work!
Wednesday, May 5, 2010
More on today's market on Cinco De Mayo
Mortgage Bonds are trading higher so far today, but off their best levels. The bond market continues to attract investment dollars as a safe haven from the ongoing - and increasing uncertainty of the situation in Greece.
Today, over 40,000 Greeks are rioting in the streets, engaging in violent protests against the Greek Government's proposed austerity measures. This has spooked the Stock market, and is helping Bonds move higher. Further - another troubling headline is coming from the Eurozone today, as Portugal is apparently facing another potential downgrade on their debt - prompting investors to move even further into the safe haven of Bonds.
Market volatility has been sharply higher of late, and the VIX volatility index -which measures volatility in the Stock market - has risen very sharply over the last four trading sessions. The VIX is a widely used measure of market risk, and is oftern referred to as the "investor fear guage."
While Bonds are higher-they are near their resistance levels marked by the highs seen back n February and March. Additionally, Bonds are now in an overbought state, making them ripe for a reversal lower.
If you are obtaing a loan on a mortgage, now just might be the best time in two or three months to "lock" your loan until closing!
Today, over 40,000 Greeks are rioting in the streets, engaging in violent protests against the Greek Government's proposed austerity measures. This has spooked the Stock market, and is helping Bonds move higher. Further - another troubling headline is coming from the Eurozone today, as Portugal is apparently facing another potential downgrade on their debt - prompting investors to move even further into the safe haven of Bonds.
Market volatility has been sharply higher of late, and the VIX volatility index -which measures volatility in the Stock market - has risen very sharply over the last four trading sessions. The VIX is a widely used measure of market risk, and is oftern referred to as the "investor fear guage."
While Bonds are higher-they are near their resistance levels marked by the highs seen back n February and March. Additionally, Bonds are now in an overbought state, making them ripe for a reversal lower.
If you are obtaing a loan on a mortgage, now just might be the best time in two or three months to "lock" your loan until closing!
Monday, March 1, 2010
By The Numbers - Monday, March 1, 2010
Any school kid knows the old saying...that March comes in like a lion and goes out lke a lamb. But since this is the last month of the Fed's Mortgage Backed Security purchase program, interest rates in March could very well come in like a lamb and go out like a lion.
There has been considerable jawboning abut how there will be no negative reaction for interest rates when the Fed bying stops. This "whistling past the graveyard" just doesn't make sense to me, and I feel strongly that rates will move higher - albeit the move higher will be gradual, but rates will be adversely affected in the absence of the Fed purchasing. And I also hear the question, "Do you think rates will go higher once the Fed stops purchasing?" The answer is ..they already have. Rates are .25 to .375% above where they were just a few months ago.
In fact, rather than being a buyer of Mortgage Backed Securities, the Fed said at the last Fed Meeting on Jan 27th that they will in fact gradually become a seller of MB and other government debt, in order to trim their balance sheet. At the moment, the Fed has $777B in Tresuries, $166B in agency debt and will have a whopping $1.25T total in Mortgage Bonds on their books. When you consider this enormous supply of paper that will be unloaded over time, in conjunction with the new Treasury supply coming to market every two weeks - there is only one way to attract buyers to purchase this massive government debt supply...and that is by offering higher rates. Bottom line - if you still hoping for lower rates, you may be running out of time. Now is the ideal time to "get off the fence," and make a decision.
There are also a couple of other factors that have been helping rates which will eventually come to and end. The Carry Trade, will unwind once the Fed begins to tighten - and chances are high that the tightening will begin later this year. Bonds have also been greatly helped by a flight to quality, over fears of a Greek sovereign debt default. I feel strongly there will be a Greek bailout and once announced, the safe haven trade will reverse, which should push Bond prices lower and interest rates higher.
For now-as we begin this first week of March, Mortgage Bonds are trading in lamb-like fashion, presently near unchanged levels, thanks to some tame consumer inflation data. The January Core Personal Consumption Index, PCE, which measures consumer inflation, came in at 0.0% matching expections. This left the year-over-year Core PCE rate at a modest 1.4%, and at the moment, well within the Fed's comfort zone.
If you are a Realtor and have people waiting on lower rates, have them read this blog or give me a call at 601.977.6228.
There has been considerable jawboning abut how there will be no negative reaction for interest rates when the Fed bying stops. This "whistling past the graveyard" just doesn't make sense to me, and I feel strongly that rates will move higher - albeit the move higher will be gradual, but rates will be adversely affected in the absence of the Fed purchasing. And I also hear the question, "Do you think rates will go higher once the Fed stops purchasing?" The answer is ..they already have. Rates are .25 to .375% above where they were just a few months ago.
In fact, rather than being a buyer of Mortgage Backed Securities, the Fed said at the last Fed Meeting on Jan 27th that they will in fact gradually become a seller of MB and other government debt, in order to trim their balance sheet. At the moment, the Fed has $777B in Tresuries, $166B in agency debt and will have a whopping $1.25T total in Mortgage Bonds on their books. When you consider this enormous supply of paper that will be unloaded over time, in conjunction with the new Treasury supply coming to market every two weeks - there is only one way to attract buyers to purchase this massive government debt supply...and that is by offering higher rates. Bottom line - if you still hoping for lower rates, you may be running out of time. Now is the ideal time to "get off the fence," and make a decision.
There are also a couple of other factors that have been helping rates which will eventually come to and end. The Carry Trade, will unwind once the Fed begins to tighten - and chances are high that the tightening will begin later this year. Bonds have also been greatly helped by a flight to quality, over fears of a Greek sovereign debt default. I feel strongly there will be a Greek bailout and once announced, the safe haven trade will reverse, which should push Bond prices lower and interest rates higher.
For now-as we begin this first week of March, Mortgage Bonds are trading in lamb-like fashion, presently near unchanged levels, thanks to some tame consumer inflation data. The January Core Personal Consumption Index, PCE, which measures consumer inflation, came in at 0.0% matching expections. This left the year-over-year Core PCE rate at a modest 1.4%, and at the moment, well within the Fed's comfort zone.
If you are a Realtor and have people waiting on lower rates, have them read this blog or give me a call at 601.977.6228.
Friday, February 5, 2010
Jobs Report Friday
The Jobs Report arrived, and the numbers were both good and badd...depending on which survey you are looking at, and what numbers you are focused on. Mortgage Bonds reacted negatively to the release of the numbers, but have since come back near unchanged levels.
The headline number of job creations was -20,000 for January, which was worse than expections of 15,000 jobs gained. This number comes from the Business Survey, aka the Establishment Survey or also called the CES (Current Employment Statistics) Survey. It's so inaccurate that it actually goes by three different aliases. In any event, it surveys about 140,000 businesses and government agancies-although the media will often mistakenly tell you that this survey is of about 300,000 businesses. This survey uses the birth/death ratio to help calculate the headline number of jobs gained or lost, which I have often discussed here on my blog in the past as being susceptible to significant inacuracies in times where the labor market is substantially worsening or improving.
And speaking of inaccuracies, the revisions to recent Business Survey numbers were once again quite large. December's was revised to 150,000 jobs lost, nearly doubling the original report of 85,000 job losses. Although November showed 60,000 additional gains - wait a minute- October's revisions showed another 100,000 jobs lost. And if that weren't enough, the Business Survey threw in a Benchmark Revision, which indicatd that there were an additional 900,000 jobs lost from March 2008 -March 2009 from what was previously reported!
No matter how you slice it, this report was not good!
As you know, I have always explained that there are two important surveys within the Jobs Report, the aforementioned Business Survey with all its aliases, and the Household Survey. As the name might imply, this survey includes actual phone calls made to households. There are about 50 - 60,000 households that are attempted to be contacted. And I have historically put more weight in the reliability of this survey, especially during times when the labor market is significantly worsening or improving.
The CPS or Household Survey gives us the headline Unemployment Rate, which was reported at 9.7%. That's an inprovement over last month's reading of 10.0%. But this survey has its own job creation/loss number,just like the Business Survey does. The media most oten inexplicably ignores this number. However, this morning's media coverage is suddenly highlighting the Household Survey. The Household Survey showed that 540,000 jobs were created during January, which is really good news, and explains why the Unemployment declined in the face of the Business Survey showing job losses. Remember, the Unemployment Rate comes from the Household Survey. It's interesting to see the media suddenly point to the Household Survey data this morning, when just last month, they completely ignored the 590,000 jobs that the Household Survey indicated were lost!
That said, we are taking all this information as a sign of good news for the labot market. Although...it must be factored in that some of the hiring included temporary census workers, which will have an influence on the next several months Job Reports. And that's important, because Fed members will see this report as a step in the right direction. While we know that reports can be volatile from month to month - and there is still much work to be done - the Fed will have an opportunity to see the release of next month's report prior to their next meeting, Rate Decision and Policy Statement. And should the Fed get another favorable batch of data next month, it may be enough to influence them to remove the famous "extended period" comment from their Policy Statement. Remember Fed President Thomas "BBQ" Hoenig already dissented to the use of the "extended period" pharase in the last Policy Statement.
Speaking of the Fed, they purchased $12B in Mortgage Backed Securities last week, bringing the total to $1.173T since the program began in January of 2009. This only leaves $77B in purchases to be made over the next eight weeks - that's less than $10B a week, and far less than what they've been purchasing. CNBC's Steve Liesman went on to rant this morning that there will be no change to mortgage rates after the Fed stops buying. I'll go ahead and take the other side of that bet...and think you should too!
The headline number of job creations was -20,000 for January, which was worse than expections of 15,000 jobs gained. This number comes from the Business Survey, aka the Establishment Survey or also called the CES (Current Employment Statistics) Survey. It's so inaccurate that it actually goes by three different aliases. In any event, it surveys about 140,000 businesses and government agancies-although the media will often mistakenly tell you that this survey is of about 300,000 businesses. This survey uses the birth/death ratio to help calculate the headline number of jobs gained or lost, which I have often discussed here on my blog in the past as being susceptible to significant inacuracies in times where the labor market is substantially worsening or improving.
And speaking of inaccuracies, the revisions to recent Business Survey numbers were once again quite large. December's was revised to 150,000 jobs lost, nearly doubling the original report of 85,000 job losses. Although November showed 60,000 additional gains - wait a minute- October's revisions showed another 100,000 jobs lost. And if that weren't enough, the Business Survey threw in a Benchmark Revision, which indicatd that there were an additional 900,000 jobs lost from March 2008 -March 2009 from what was previously reported!
No matter how you slice it, this report was not good!
As you know, I have always explained that there are two important surveys within the Jobs Report, the aforementioned Business Survey with all its aliases, and the Household Survey. As the name might imply, this survey includes actual phone calls made to households. There are about 50 - 60,000 households that are attempted to be contacted. And I have historically put more weight in the reliability of this survey, especially during times when the labor market is significantly worsening or improving.
The CPS or Household Survey gives us the headline Unemployment Rate, which was reported at 9.7%. That's an inprovement over last month's reading of 10.0%. But this survey has its own job creation/loss number,just like the Business Survey does. The media most oten inexplicably ignores this number. However, this morning's media coverage is suddenly highlighting the Household Survey. The Household Survey showed that 540,000 jobs were created during January, which is really good news, and explains why the Unemployment declined in the face of the Business Survey showing job losses. Remember, the Unemployment Rate comes from the Household Survey. It's interesting to see the media suddenly point to the Household Survey data this morning, when just last month, they completely ignored the 590,000 jobs that the Household Survey indicated were lost!
That said, we are taking all this information as a sign of good news for the labot market. Although...it must be factored in that some of the hiring included temporary census workers, which will have an influence on the next several months Job Reports. And that's important, because Fed members will see this report as a step in the right direction. While we know that reports can be volatile from month to month - and there is still much work to be done - the Fed will have an opportunity to see the release of next month's report prior to their next meeting, Rate Decision and Policy Statement. And should the Fed get another favorable batch of data next month, it may be enough to influence them to remove the famous "extended period" comment from their Policy Statement. Remember Fed President Thomas "BBQ" Hoenig already dissented to the use of the "extended period" pharase in the last Policy Statement.
Speaking of the Fed, they purchased $12B in Mortgage Backed Securities last week, bringing the total to $1.173T since the program began in January of 2009. This only leaves $77B in purchases to be made over the next eight weeks - that's less than $10B a week, and far less than what they've been purchasing. CNBC's Steve Liesman went on to rant this morning that there will be no change to mortgage rates after the Fed stops buying. I'll go ahead and take the other side of that bet...and think you should too!
Monday, February 1, 2010
February Market Update
"THE NINE MOST TERRIFYING WORDS IN THE ENGLISH LANGUAGE ARE: `I'M FROM THE GOVERNMENT, AND I'M HERE TO HELP.`" Ronald Reagan. And regardless of if those words do indeed terrify you or perhaps give you confidence, the government held center stage last week, with a pivotal Federal Reserve Board Policy Statement, President Obama's first State of the Union address, and Ben Bernanke's confirmation for another term as Fed Chairman.
The Obama administration just released their 2011 Fedeal Budget, which runs from October 2010 to September 2011. It is estimated to come in at $3.8T, which is 3% larger than this present year's budget. Higher taxes for those making more than $250,000 are part of the plan - and although spending cuts have been mentioned, they appear to be largely window dressing. And this budget estimate could even be a bit on the optimistic side...if the economy does not recover as expected, overall tax receipts will decline, making the projected deficit of $1.3T even higher! How do you like this hope and change?
Remember, this massive new budget will ned to be funded by yet more Treasury auctions. And over time, the added supply of Treasury debt will pressure rates higher, as the goernment will ned to entice buyers with higher rates of return. This could have a negative impact on Mortgage Bonds and home loan rates, especially after March 31st, once the Fed is no longer buying Mortgage Backed Securities.
There are now just Two (2) Months remaining (i.e., February and March) in the Fed's program to purchase $1.25 trillion of mortgage backed securities. The program, which originally began in Fed purchases in March 2009, will stop by the end of next month. Eric Rosengren, the President of the Federal Reserve Bank of Boston, predicted last month that rates will rise by as much as .75% when the purchase program ends (source: Federal Reserve)
The Obama administration just released their 2011 Fedeal Budget, which runs from October 2010 to September 2011. It is estimated to come in at $3.8T, which is 3% larger than this present year's budget. Higher taxes for those making more than $250,000 are part of the plan - and although spending cuts have been mentioned, they appear to be largely window dressing. And this budget estimate could even be a bit on the optimistic side...if the economy does not recover as expected, overall tax receipts will decline, making the projected deficit of $1.3T even higher! How do you like this hope and change?
Remember, this massive new budget will ned to be funded by yet more Treasury auctions. And over time, the added supply of Treasury debt will pressure rates higher, as the goernment will ned to entice buyers with higher rates of return. This could have a negative impact on Mortgage Bonds and home loan rates, especially after March 31st, once the Fed is no longer buying Mortgage Backed Securities.
There are now just Two (2) Months remaining (i.e., February and March) in the Fed's program to purchase $1.25 trillion of mortgage backed securities. The program, which originally began in Fed purchases in March 2009, will stop by the end of next month. Eric Rosengren, the President of the Federal Reserve Bank of Boston, predicted last month that rates will rise by as much as .75% when the purchase program ends (source: Federal Reserve)
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