Posts Tagged ‘Bernanke’

Recovery? We’ve Hit Bottom? Whats that you’re saying Bernanke?

Wednesday, May 6th, 2009

I meant to get to this post yesterday as that’s well, when the story came out…however my cell phone tends to agree with Bernanke that bernankethings are looking up because it’s been going nutts recently…today was even worse (umm, errr - Better!), but I had to get this in.

Aside from mentioning he expects further job cuts Fed Chariman Ben Bernanke told the Congressional Joint Economic Committtee that he see signs of a recovery and feels we’ve hit bottom citing an uptick in home sales and consumer confidence in recent months.

Being an optimist I’ve felt for quite a while that 2009 was going to be the year we see improvement, moving up the other side so to speak, but I keep hearing others, economists, politicians, neighbors, media personalities etc saying they feel we’re going to see a bump and then the “real crash” (sounds scary doesn’t it? Me thinks some are playing to the fear factor) after this current bump which is not inline with Bernanke’s comments. I remain cautiously optimistic, on the one hand I wouldn’t be entirely surprised to see a future slump, maybe even more significant, but on the other hand consumer spending, real estate etc is a large chunk of what drives a healthy US economy and if those are increasing; well that’s a sign of improvement. I think it would take something fairly significant to happen to send us back down again, thus I remain optimistic that Bernanke’s comments are accurate showing signs that 2009 will indeed be the year we see a recovery or at least the beginning.

Here’s an MSNBC.com article on Bernanke’s comments to the Joint Economic Committee

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Bruce Howard with Landover Mortgage: Daily Market Commentary – May 5th 2009

Tuesday, May 5th, 2009

landover_01In a widely circulated story, Barack Obama was apparently misquoted. Leading publications state that he said, “Wait a minute now, I didn’t authorize attacks on the Pirates, I authorized a tax on the pirates.”

GMAC Financial Services reported a first quarter 2009 net loss of $675 million, compared to a net loss of $589 million in the first quarter of 2008. They attributed the losses to “continued pressure in mortgage operations related to valuation adjustments on mortgage servicing assets, weaker credit performance on both auto and mortgage assets, mark-to-market adjustments on derivatives, and an original issue discount related to the fourth quarter debt exchange.” In similar fashion, Radian Group (the #2 mortgage insurer) posted a first-quarter loss of $217 million, hurt by unrealized loss on derivatives and continued increase in mortgage-insurance defaults.

Back to the markets! As long as the Federal Reserve Bank of New York keeps buying agency MBS’s, everything is ok, right? Let’s hope so, since they continue to be the dominant buyer by far. Last week they had “net purchases” of $23.1 billion, gross purchases of $59.6 billion. 97% of purchase activity is limited to 4.0% and 4.5% MBS’s, which typically encompass 4.25-5.125% mortgages – and only 7% of the securities are Ginnies comprised of FHA and VA loans.

Yesterday we had some good economic news, and the markets moved accordingly. Pending Home Sales rose 3.2%, and the Housing Affordability Index remained near record highs – certainly much higher than it was a year ago. Construction Spending was +.3% in March, which is the first increase in six months. Yes, most of it was increases in commercial and government projects, but we’ll take what we can get. Today we have the small issue of selling $35 billion in 3-yr Treasury notes, which may keep rates a little high in spite of the market being technically oversold. Currently the 3-yr yield is 1.39%, the 10-yr is 3.15%, and mortgage prices are better by .125-.250. Bernanke’s testimony had little impact on MBS prices.

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