Danny Salas

Archive for January 22nd, 2010

Chico, CA Interest Rates Market Report – Economic Influences – January 22, 2010

Can Stocks Break Out Of Their Downward Spiral?

Obama’s Banking Platform

With President Obama’s announcement, last night, the Stock Market is getting hit due to nervousness about how the plan will effect the banking industry, not only at home, but world-wide.  Many are voicing their opinion that these proposed regulations and industry changes will cost American jobs.  Criticism is wide-spread on both sides of the isle.  With this proposal, our stance on locking has changed to a very careful float.  I’ll explain later.

Speaking of Stocks

This is a tough position to be.  The Dow is fighting support at their 50-Day Moving Average.  The S & P 500 is fighting tough support at their 50-Day Moving Average.  They’re currently both below their respective 50-Day Moving Averages and both have not closed below this level since July of 2009.  So, if both do, it could be very unpleasant for stocks, but very favorable for bonds and interest rates.  So, again, we carefully float, in case we see that opportunity.

Delay Confirming Bernanke

The Senate has postponed their confirmation vote, for a second term, for Ben Bernanke as Fed Chair.  This also has investors concerned, particularly in light of Obama’s speech.  There are only nine days left, for the confirmation of Bernanke, before he must hand over, in a temporary fashion, the torch to Vice-Chair, Donald Kohn.

$1.25 Trillion Purchase Program

The Fed Auctioned and purchased another $12 Billion is Mortgage-Backed Securities, last week.  This only leaves $101 Billion from the $1.25 Trillion already purchased.  So, be prepared for higher rates, as investors will have to pick up the slack, when funds will no longer be available to purchase these securities.  It will be hard pressed to lure investors to purchase, unless the rate of return is higher than other returns…meaning higher interest rates.

Locking Advice

Register any loans with the lenders of choice, so that, at a click of a button, you can lock.  If you can’t stomach the risk.  Lock!

Related Must Reads

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