Recently something occurred that hasn't happened in more than 4 years. The stock market has fallen below 10,000 for the DOW. With several days sporting losses of 500 points or more, things seem to be getting worse, not better for investments and the economy as a whole.
The recent $700billion bailout bill has been signed, but it's been said many of the effects may not be seen for months. With such turmoil in the marketplace, I and many of you are left wondering what will this country look like in a few months?
The Fed, who as recently as 2 months ago said the funds rate clearly needed to be raised to stave off inflation, is now prepared to make yet another rate cut, which could be bad for inflation, however it seems they're working with global communities to cut rates, because if everyone else cuts as well, the dollar won't lose ground to any foreign currencies.
Im not normally a doom and gloom person, I always think it a better idea to not only weather storms, but to seek opportunity in them. As Warren Buffett said "Be fearful when others are greedy & greedy when others are fearful", and I believe this to be the truth. Sure, many people cannot afford their housing payments or monthly debts, and I'm certainly not above the middle-class American either. I've seen things tightening up and my own finances aren't as certain as they once were, but I see the opportunity here!!!
Think of this...with the funds rate lowered, money is cheaper to obtain. Right now mortgage interest rates are in the mid-5%'s, and the prime rate is helping keep even credit card rates low. If you could pull out equity in your home, or take a low-interest rate loan, and plunge it into other investments, when this thing swings around, there will be many rewards to reap. Historically, the stock market returns 8-10% on investments. Right now it's losing money, so many stocks are cheap and discounted. If you can take a stock that's currently down, you can be there when it rebounds and make a killing. It's about timing, and now's the time to get in...interest rates are low, gas prices are coming down, and in a month a new President will come aboard trying to right this ship. If they do, and the market recovers sooner than later, there will be some that made money and are doing better than they ever expected, and those still with their heads in the sand, waiting for the storm to pass.
Yes, it has happened, for the first time in 25 years, Philadelphian's can attend a championship parade down broad street!!!
With a 4-3 victory last night, the Phils became the first Philly team since the 83' 76ers to bring a championship home, and the first baseball champions since Steve Carlton's 1980 Phils' squad.
While broad street looked insane last night, I'm sure there will be further celebration with tomorrow's parade, and I will be partaking to the fullest. Yes, I have work to do, and yes, there are loans to close...but 25 years? I may be old and gray by the time there's another championship parade, so I'm not taking any chances. This is a great part of the city's history, and I think everyone should take off (sports fans, at least) to enjoy it. Waiting so long (since I really got into sports around the age of 5) has made this all the more sweet, and I'm sure this will be something I can someday tell my kids and grandkids about. Cant wait!
(I will still be available to take care of any issues w/loans or answer questions via cell phone)
2008 PHILADELPHIA PHILLIES, WORLD SERIES CHAMPIONS!!!Now, these guys get to walk together forever!
With election day just around the bend (or the weekend), and a day after his 30-minute/infomercial/last-ditch effort to get some on-the-fence voters, I was shown what I thought was a very good article. Since I write myself, I'm usually critical of others, but this is good stuff, whether you're voting for Obama or not.
The presidential election
Oct 30th 2008From The Economist print edition
IT IS impossible to forecast how important any presidency will be. Back in 2000 America stood tall as the undisputed superpower, at peace with a generally admiring world. The main argument was over what to do with the federal government’s huge budget surplus. Nobody foresaw the seismic events of the next eight years. When Americans go to the polls next week the mood will be very different. The United States is unhappy, divided and foundering both at home and abroad. Its self-belief and values are under attack.
For all the shortcomings of the campaign, both John McCain and Barack Obama offer hope of national redemption. Now America has to choose between them. The Economist does not have a vote, but if it did, it would cast it for Mr Obama. We do so wholeheartedly: the Democratic candidate has clearly shown that he offers the better chance of restoring America’s self-confidence. But we acknowledge it is a gamble. Given Mr Obama’s inexperience, the lack of clarity about some of his beliefs and the prospect of a stridently Democratic Congress, voting for him is a risk. Yet it is one America should take, given the steep road ahead.
The immediate focus, which has dominated the campaign, looks daunting enough: repairing America’s economy and its international reputation. The financial crisis is far from finished. The United States is at the start of a painful recession. Some form of further fiscal stimulus is needed, though estimates of the budget deficit next year already spiral above $1 trillion. Some 50m Americans have negligible health-care cover. Abroad, even though troops are dying in two countries, the cack-handed way in which George Bush has prosecuted his war on terror has left America less feared by its enemies and less admired by its friends than it once was.
At the beginning of this election year, there were strong arguments against putting another Republican in the White House. A spell in opposition seemed apt punishment for the incompetence, cronyism and extremism of the Bush presidency. Conservative America also needs to recover its vim. Somehow Ronald Reagan’s party of western individualism and limited government has ended up not just increasing the size of the state but turning it into a tool of southern-fried moralism.
The selection of Mr McCain as the Republicans’ candidate was a powerful reason to reconsider. Mr McCain has his faults: he is an instinctive politician, quick to judge and with a sharp temper. And his age has long been a concern (how many global companies in distress would bring in a new 72-year-old boss?). Yet he has bravely taken unpopular positions—for free trade, immigration reform, the surge in Iraq, tackling climate change and campaign-finance reform. A western Republican in the Reagan mould, he has a long record of working with both Democrats and America’s allies.
That, however, was Senator McCain; the Candidate McCain of the past six months has too often seemed the victim of political sorcery, his good features magically inverted, his bad ones exaggerated. The fiscal conservative who once tackled Mr Bush over his unaffordable tax cuts now proposes not just to keep the cuts, but to deepen them. The man who denounced the religious right as “agents of intolerance” now embraces theocratic culture warriors. The campaigner against ethanol subsidies (who had a better record on global warming than most Democrats) came out in favour of a petrol-tax holiday. It has not all disappeared: his support for free trade has never wavered. Yet rather than heading towards the centre after he won the nomination, Mr McCain moved to the right.
Meanwhile his temperament, always perhaps his weak spot, has been found wanting. Sometimes the seat-of-the-pants method still works: his gut reaction over Georgia—to warn Russia off immediately—was the right one. Yet on the great issue of the campaign, the financial crisis, he has seemed all at sea, emitting panic and indecision. Mr McCain has never been particularly interested in economics, but, unlike Mr Obama, he has made little effort to catch up or to bring in good advisers (Doug Holtz-Eakin being the impressive exception).
The choice of Sarah Palin epitomised the sloppiness. It is not just that she is an unconvincing stand-in, nor even that she seems to have been chosen partly for her views on divisive social issues, notably abortion. Mr McCain made his most important appointment having met her just twice.
Ironically, given that he first won over so many independents by speaking his mind, the case for Mr McCain comes down to a piece of artifice: vote for him on the assumption that he does not believe a word of what he has been saying. Once he reaches the White House, runs this argument, he will put Mrs Palin back in her box, throw away his unrealistic tax plan and begin negotiations with the Democratic Congress. That is plausible; but it is a long way from the convincing case that Mr McCain could have made. Had he become president in 2000 instead of Mr Bush, the world might have had fewer problems. But this time it is beset by problems, and Mr McCain has not proved that he knows how to deal with them.
Is Mr Obama any better? Most of the hoopla about him has been about what he is, rather than what he would do. His identity is not as irrelevant as it sounds. Merely by becoming president, he would dispel many of the myths built up about America: it would be far harder for the spreaders of hate in the Islamic world to denounce the Great Satan if it were led by a black man whose middle name is Hussein; and far harder for autocrats around the world to claim that American democracy is a sham. America’s allies would rally to him: the global electoral college on our website shows a landslide in his favour. At home he would salve, if not close, the ugly racial wound left by America’s history and lessen the tendency of American blacks to blame all their problems on racism.
So Mr Obama’s star quality will be useful to him as president. But that alone is not enough to earn him the job. Charisma will not fix Medicare nor deal with Iran. Can he govern well? Two doubts present themselves: his lack of executive experience; and the suspicion that he is too far to the left.
There is no getting around the fact that Mr Obama’s résumé is thin for the world’s biggest job. But the exceptionally assured way in which he has run his campaign is a considerable comfort. It is not just that he has more than held his own against Mr McCain in the debates. A man who started with no money and few supporters has out-thought, out-organised and outfought the two mightiest machines in American politics—the Clintons and the conservative right.
Political fire, far from rattling Mr Obama, seems to bring out the best in him: the furore about his (admittedly ghastly) preacher prompted one of the most thoughtful speeches of the campaign. On the financial crisis his performance has been as assured as Mr McCain’s has been febrile. He seems a quick learner and has built up an impressive team of advisers, drawing in seasoned hands like Paul Volcker, Robert Rubin and Larry Summers. Of course, Mr Obama will make mistakes; but this is a man who listens, learns and manages well.
It is hard too nowadays to depict him as soft when it comes to dealing with America’s enemies. Part of Mr Obama’s original appeal to the Democratic left was his keenness to get American troops out of Iraq; but since the primaries he has moved to the centre, pragmatically saying the troops will leave only when the conditions are right. His determination to focus American power on Afghanistan, Pakistan and proliferation was prescient. He is keener to talk to Iran than Mr McCain is— but that makes sense, providing certain conditions are met.
Our main doubts about Mr Obama have to do with the damage a muddle-headed Democratic Congress might try to do to the economy. Despite the protectionist rhetoric that still sometimes seeps into his speeches, Mr Obama would not sponsor a China-bashing bill. But what happens if one appears out of Congress? Worryingly, he has a poor record of defying his party’s baronies, especially the unions. His advisers insist that Mr Obama is too clever to usher in a new age of over-regulation, that he will stop such nonsense getting out of Congress, that he is a political chameleon who would move to the centre in Washington. But the risk remains that on economic matters the centre that Mr Obama moves to would be that of his party, not that of the country as a whole.
So Mr Obama in that respect is a gamble. But the same goes for Mr McCain on at least as many counts, not least the possibility of President Palin. And this cannot be another election where the choice is based merely on fear. In terms of painting a brighter future for America and the world, Mr Obama has produced the more compelling and detailed portrait. He has campaigned with more style, intelligence and discipline than his opponent. Whether he can fulfil his immense potential remains to be seen. But Mr Obama deserves the presidency.
At their meeting scheduled for this Wednesday, it seems clear that the Fed will cut the overnight funds rate (the rate at which banks borrow money) .5 percent, or 50bps, but there is also a speculation that there could be a .75 percent, or 75 bps rate cut. This will place us near or at 1%, lower than we've seen in quite some time.
Just months ago the largest fear of the Fed was inflation, sharply on the rise, and there were constant talks of "when the Fed will hike the rate to stem inflation". Just months later, and the rate is looking at more than a 5% drop since summer of 06', as the economic downturn has the decision makers in crisis mode.
What does this mean to mortgage shoppers or homeowners? Well, for one, credit card rates (generally based on the prime rate) will stay down for cardholders, and credit card companies will see larger margin profits off of new customers. Money is easier to get for banks, which should in turn make it cheaper to get for people (which is the driving force behind the idea that a rate cut stimulates the economy). Mortgage rates, however, aren't likely to join the party, as rate cuts have historically driven mortgage rates upwards. Why? Well, as a rate cut makes money cheaper to get for US banks, the dollar loses value compared to overseas currencys. This loss of value to the dollar makes investors pull their money out of the bond market and put it elsewhere, thus pressuring rates upward.
In this current market, no one really knows what to expect so far as actions and reactions. We're trying to create formulas here with variables never before seen and near impossible to judge...variables such as speculation and fear. Swallow this example...in the past 2 months there have been 19 days where the markets shifted a full 3%. Prior to that, you had to go back a full 6 years to find 19 3% change days. We're in historically volatile times, and the markets are more sensitive now than they have perhaps ever been. Only time will tell what the outcome of this week's rate cut will be, but we can all hope that the group known as the Fed knows what it's doing.
If the Phillies could hit ANYTHING with runners in scoring position, they'd be well on their way to their first world series victory in 28 years. That being said, they're lucky to have a 1-1 series split, and have Cole Hamels to thank for that.
Last night was pathetic, and historically speaking, we're so far the worst in history in the batting average w/RISP in the world series. Hopefully we can turn this thing around. It's been 20+ years since Philadelphia's seen a championship, and I'm about tired of being a city of 2nd place finishes. Someone needs to light a fire under Jimmy Rollins, and for once, the entire lineup needs to show up to hit rather than just 2 guys.
I still have faith with Cole Hamels pitching again, and if Blanton or Moyer can steal a game, we'll be golden, but let's just hope for the best for now. Lets go Phillies, bring a title home!
The Fed and Congress have expressed their non-opposition to a new stimulus package to be offered to American consumers. This comes at a time when corporations are seeing billions in "bailout" funds handed to them to stay afloat and help a struggling economy. The question is, how big will this bailout bill be?
From the first whispers I've heard, I'm hearing estimates in the ballpark of $1200, twice that of the last bailout. While many Americans problems will not be solved with this type of check, it's nice to see those in power do SOMETHING to spread some wealth to those who live well beneath the corporations skyscraper assets and budgets.
More to come as more news arrives in regards to a new bailout. Hopefully even if this doesn't stimulate the government (which it's supposed to do) it will help some homeowners make their bills and stay afloat during these tough times.
My my what a crazy ride we're on in this market right now. As a mortgage market "expert", I can tell you one piece of advice on what to do if you have a deal pending right now...LOCK YOUR RATE...or....FLOAT YOUR RATE...this market is completely upside down at the moment with both stocks and bonds crashing hard. Although the DOW recently experienced it's largest one day jump in history, it's lower today, and mortgage bonds are drowning, raising rates substantially.
The reason behind this is that investors have all their investments right now in cash. No one seems to want stocks, bonds, or commodities, as all 3, including oil commodities, have fallen over the past week and a half. I believe the experts that say things will right themselves quickly as soon as the effects of the recent bailout take hold and are better understood, but for now, things look bleak on the mortgage front. Rates are about .75% higher than they were just a couple weeks ago, so some homeowners will want to wait for a reversal, while anyone looking to refi is better off waiting as well. Unfortunately, that's what the investors are doing as well...waiting. As all this waiting is taking place the market is stagnant, someone needs to step up and do something to stimulate the markets and investors, and a $300 check isn't going to do it this time around.
For now, the stock market remains under the 10,000 mark, bonds are drowning under their 100-day moving average, and oil hit $80 (what a different from their $147/barrell in July).
Today was the first time I saw that terrifying term...Global Recession....scary stuff
The Fed, along with the Central Bank of Europe and UK Bank cut their funds and overnight rates by .5 this morning, in an action attempting to unfreeze credit markets. The reaction? An initial boost to stock, and then another landslide, down 200+ points on the day so far. It is likely that we'll see another .5 decrease in the rate at the Oct 28-29 Fed meeting scheduled. With the stock market seeing substantial losses in just a few days, it should be very interesting to see where the market is, because with this volatility, things could change drastically in just a couple weeks.
There are several oddities occurring which signal some trouble. For one, wholesale lenders are consolidating their business structures, cutting off many brokers (CitiMortgage announced yesterday they'd be cutting 8,000 brokerages out of their clientele), and eliminating programs while making stricter guidelines on remaining programs at an alarming rate. It seems investors are so terrified of taking on bad debt that pretty soon lenders will be asking for fingerprints, hair samples, and dental records of borrowers before they offer a loan.
Another oddity lies within the rates. Right now rates are lower than they've been in a while, and should go even lower with the election around the corner (when we discover who will inherit this mess) so it's a great time for squeaky clean borrowers to refinance, even drawing cash out of their homes for investment purposes. The crazy thing I'm seeing is several lenders are offering the same rate for both a 15 and 30-year fixed rate mortgage. In my time in this business, a 15 year has always presented less risk,and has therefore resulted in a lower rate, however it seems banks and investors are so confused about risk, pricing, and current market conditions, that their pricing departments aren't even sure what to do.
Keep your hands inside the car, people, and please make sure your safety harness is firmly in place, this is gonna be a crazy ride over the next month. I'll keep you all updated to new news as soon as I hear it.
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