Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – October 14, 2009

JP Morgan Chase Earnings Up

Today’s movement, in the markets, is the opposite of yesterday’s.  Stocks are enjoying the fact that Chase reported higher earnings than expected, as well as Intel.  So the Dow Jones Industrial Average is pushing 10,000.  A significant level, both psychologically and financially.  But even a push over 10,000 might cause the markets to reverse when investors cash in on their recent earnings. 

Hot Retail Sales…OR Not So Hot

Now that the “Cash for Clunkers” Program is over, Retail Sales for September fell by 1.5%.  However, the government expected a -2.1% adjustment.  Taking out auto sales, the report showed a 0.5% increase.  Better than the 0.2% increase expected.  So, why “Not So Hot?”  Even though these numbers are, “better than expected,” they’re still ugly figures.  Pre-holiday sales are showing that retailers are unable to promote any price increases, or have comfortable and sustainable growth.  These figures will show, later in the year, in the year-over-year Retail Sales numbers.  It’s one of those particulars that changes interest rates, somewhat unfairly.  Because the market interprets these numbers positively, and therefore interest rates suffer.  However, once the information has time to really seep into the market, an opportunity for rates to recover, could be lost. 

Cash For Clunkers Accounting

Looks like the government is going to use the “Cash for Clunkers” Program to take advantage how inflation is reported.  What I mean is that they are accounting for the $4,500 tax break as a discount in vehicle sales prices.  Who cares, you might ask…Seniors might!  Here’s why.  Accounting for a lower price, in vehicles, will translate into lower inflation.  If vehicles’ values are going down, that doesn’t translate to economic growth.  So, it’s kind of a brilliant way to look at things.  Lower inflation translates to lower interest rates!  However, lower inflation also saves our government money when paying social security benefits; as social security benefits are adjusted with inflation. 

Locking…

We do have some support, below us, with the 200-Day Moving Average, so, it’s risky.  But, if you have a strong stomach, you can float.  If you don’t…I’d lock.

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This entry was posted on Wednesday, October 14th, 2009 at 8:18 am and is filed under Chico Home Loans, Home Buying, Interest Rates, Loan Qualification. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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