Friday July 11, 2008

July 11, 2008 at 11:06 am · Filed under Affordable Housing, Energy Crisis, Headlines, Residential, The Mortgage Market

Volatility in stocks leads to a mild bond rally.

Bonds are flat at the time of this post, but they weren’t that way earlier.  We have been up and down and back to the middle today on a variety of financially related news.

Oil prices hit a new high this morning after an early spike of almost $5/barrel to push it over $147 for the first time.  This spike in oil caused a sell off in stocks, and a sell off in stocks went into the bond market creating a little upward movement this morning.

If you haven’t seen the news yet, Fannie Mae and Freddie Mac (the nations 2 largest secondary mortgage market guarantors, and holders of over 50% of the total $6 trillion in existing home mortgages) are hurting.  Secretary of Treasury Henry Paulson had some possitive things to say about them yesterday and how the government can help to fortify their position.  Then, the New York Times reported that the government is considering a contingency plan to take over Fannie Mae and Freddie Mac.  This, of course, is not good news for anybody, and traders were lining up to sell stock in both companies today leading to a 40% decline in value.

Now, the bond market feeds on bad news, so there was a rally based on all of the above mentioned negativity.  Then, the report about US exports came out with a lower than expected trade deficit, and much better than expected foreign consumption of US goods.  Apparently, the weak dollar makes exports to foreign countries more palatable, and our friends across the pond are buying more of our goods as a result.

All in all, I will stick with my recommendation from yesterday to lock your mortgage rate if you have a short term mortgage in processing.  We are still facing a significant upside resistance level at the 200 day moving average, and it is not likely that any gains that may be obtained would be worth sitting with baited breathe and calling your mortgage banker 4 times a day.  Go ahead and lock, then enjoy your weekend.

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The Pickens Plan – A Solution To The Energy Crisis

July 9, 2008 at 9:53 am · Filed under Energy Crisis, Headlines, The Mortgage Market

The Pickens Plan may be the most viable option to release our dependence on foreign oil.

Most of you know that this blog is primarily about mortgages and the real estate market.  But, I also have discussed at length recently the affect that oil has had on our economy and consequently the affect it has had on mortgage bonds which control mortgage rates.  Because of that, I feel this topic is still relevant to the blog.

I saw this guy on CNBC the other day named T. Boone Pickens.  i didn’t know who he was, but apparently he is a lifelong oil man from Texas, and a billionaire because of it.  He was discussing the country’s problem with oil, and I was busy so I barely paid attention.  Then this morning, I saw a commercial that he has paid for so I went to his website to learn more about his plan.

What i discovered on his site was a simple 5 minute video of exactly what is going on, how it will continue to affect us, and how we can fix it.  I have never seen it described in such a simplistic way, but it really is a simple supply and demand issue.  In addition, we are sitting on huge reserves of natural gas and an abundance of wind power in the middle of the country east of the Rocky Moutains.

Take a look at the site and watch the video to decide for yourself.  But, I believe that it will take visionaries in the private sector to come up with solutions like this.  To rely on government to fix it will lead to bigger problems and very likely no real solution.

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