Market Watch 1.8.09

Mortgage Bonds are trading higher and at historic levels as the Fed was likely active in the markets continuing their purchase program this morning.

Meanwhile, Stocks are under selling pressure thanks to a rash of earnings warnings from the nation's retailers. Wal-Mart said today that 4th quarter profits will miss expectations after one of the worst holiday shopping seasons on record, while Macy's and Limited Brands cut their earnings forecast after the weak December sales readings. Macy's also said they are closing 11 stores.

In other news, the markets are bracing for a bad Jobs Report tomorrow and if the number is indeed bad, Mortgage Bonds could improve further as Stocks will likely come under selling pressure. Therefore, I recommend floating into tomorrow's report, but I will let you know if the news of the day requires a change of course.

Market Watch 1.7.09

Mortgage Bonds are taking a breather so far today, after a sharp run up the last two days which was fueled by the Feds long-term purchase program of mortgage backed-securities.

This morning, the ADP Employment report showed US private firms lost a whopping 693,000 jobs in December. This was far worse than expectations of 495,000 jobs lost.

The Fed's purchase program should help mortgage rates going forward. For now, I am recommending to carefully float however with so much volatility in the markets, things can change quickly.

Market Watch 1.6.09

Mortgage Bonds are taking a breather so far today, after a sharp run up the last two days which was fueled by the Feds long-term purchase program of mortgage backed-securities.

This morning, the ADP Employment report showed US private firms lost a whopping 693,000 jobs in December. This was far worse than expectations of 495,000 jobs lost.

The Fed's purchase program should help mortgage rates going forward. For now, I am recommending to carefully float however with so much volatility in the markets, things can change quickly.

Market Watch 12.17.08

The Fed lowered the Federal Funds Rate by .75% to a target range of 0% to .25%, and also lowered the Discount Rate by .75% to .50%. The statement that followed the cut said that the Fed was prepared to take aggressive steps to revive the sagging US economy.

In the past, Mortgage Bonds have reacted negatively to Fed cuts as fears of inflation come to life. But the Fed stated that inflation pressures have diminished appreciably and expects inflation to moderate further in coming quarters, hence the reason home loan rates are improving.

There are no economic reports due out today. For now, I recommend continuing to float.

Market Watch 12.12.08

Bonds have been all over the board this morning, as the big news of the day has Traders dazed and confused. Last night, the Senate rejected the $14 Billion rescue plan for the US automakers, citing a lack of wage concessions by the United Auto Workers. However, the White House is now indicating it may be willing to use funds from the Troubled Assets Relief Program to save the auto industry from immediate collapse.

Also this morning, inflation at the wholesale level came in near expectations in November, as the Producer Price Index dropped 2.2% due largely to declining energy prices. Retail Sales for November also fell for a fifth straight month, but were actually slightly better than market expectations.

Currently, Bonds are showing indications of being overbought, which could lead to price losses later today. I recommend floating for now, but be prepared to lock should prices start falling. I will keep you posted.

The Credit Crunch: A Wake up Call for Consumers.

Over the last several months we've seen our economy take a severe beating. It started with the mortgage meltdown and is now seeping its way through Wall Street, the stock market and straight toward the credit card issuers. There are also signs that this trend has trickling down and is beginning to impact aspects of the consumer credit lending environment. These factors alone leave little doubt that we're facing one of the most severe economic environments since the great depression.

While financial analysts and economists continue to debate over the impact that the $700 billion bail out will have on the average American consumer, none of us really knows for sure what will happen over the next 12 to 24 months. What we do know is that lenders have already begun to tighten up their lending requirements and this means continued changes in the consumer credit environment as this crisis evolves. It also means that many Americans are facing a stern wakeup call in regards to the way we currently view and manage our credit.

It doesn't take a financial genius to figure out that the mortgage industry's lending practices were in dire need of a complete facelift. Two years ago, you could pretty much qualify for a mortgage with a minimum FICO score of 580 -- as long as you had a pulse. Not enough consideration was given to whether or not you could actually afford the loan or whether or not you had a high risk of defaulting on the loan itself.

These days 'easy money' is a thing of the past. To give you an idea of how things have changed, in order to get the best deal on a mortgage today you're going to need a score in the 720+ range. And the score alone won't guarantee an approval - you'll also need to meet the new income and collateral requirements. And if you think this is only happening in the mortgage industry, think again.

We're also beginning to see changes in the auto and credit card industries. Take GMAC for example, who recently announced that they would no longer approve loans for consumers that had FICO scores below 700. Other lenders like USAA, have not only increased their score cutoffs on their auto loans, but also on credit card and personal loan approvals. See the pattern? Make no mistake, lenders across the board are becoming more cautious and are beginning to safeguard themselves by looking for borrowers that pose less risk. Less risk means higher credit scores and more lenders are going to place even more emphasis on your credit scores and credit report data.

So how does this impact the rest of us? The current state of our economy has many of us worrying about what tomorrow may bring. This means that a lot of us will need to take a step back, re-evaluate the way we manage our finances and our credit obligations, and start living within our means instead of beyond them. There are two important lessons that we can learn from this debacle:

1. Credit isn't a right - it's a privilege. How we manage our credit reports and credit scores are a direct reflection of our credit risk. For high scorers (750-780+), the credit crunch probably won't impact your ability to obtain credit when you need it. But for those that have poor credit and credit scores, it's going to be even more important than ever.
2. It's time to start living within our means. That's right, it's time to take a step back and reevaluate our relationship with money and realize that if you can't afford something, then you shouldn't be buying it. This means reevaluating how and why we use credit cards. Is it to live an unrealistic lifestyle? If so, time to make the change.

The current financial crisis is a wake up call for all of us. And while many blame the current crisis on the sub-prime mortgage industry giving loans to consumers that shouldn't have been approved in the first place, (which may be true) -- we can't ignore the fact that consumers that got themselves into these loans should at least share a part of the responsibility. At some point, we all need to accept responsibility and be accountable for our own actions.

CLICK HERE TO LEARN MORE ABOUT WE CAN HELP

Daily Market Watch for 11-26-08

A Thanksgiving-like helping of economic news was served this morning and as a result, Mortgage Bonds are a trading a little higher. Durable orders were much lower than expected, while initial jobless claims were actually better than expected.

Inflation as measured by the Core PCE was tamer than estimates. Chicago PMI fell and Consumer Sentiment is still in the dumps. New Home Sales dropped to the lowest levels since 1991 but inventories have fallen 25.7%, the biggest drop since the government began tracking the data in 1963.

Yesterday's Fed announcement that it will be purchasing Mortgage Backed Securities from Fannie Mae, Freddie Mac and Ginnie Mae should help lower home loan rates over time. For today I will recommend to Float.

Daily Market Watch for 11-14-08

Mortgage Bonds are higher this morning after Retail Sales numbers fell for the fourth straight month and plunged to their worst level since record keeping began in 1992. This is important information because it indicates a bad outlook for the retail industry overall and comes as we head into what looks to be the worst holiday shopping season in a long, long time.

In other news, Fed Chairman Ben Bernanke spoke in Germany today, indicating that central bankers worldwide are prepared to take additional actions to unfreeze global credit markets.

Earlier this morning, Bonds opened above the 200-Day Moving Average, but have since dipped back below this important level. For now, I recommend floating as we watch to see how Bonds react to the market news. However, if the situation changes, I will keep you posted.

For Detailed video CLICK HERE

Daily Market Watch for 11-13-08

Bonds are facing some selling pressure this morning, as Stocks are attempting to stabilize and move higher after three days of hard losses. The modest rally in Stocks is a bit puzzling when you consider the continuing barrage of bad news, including lower future earnings guidance from Wal-Mart and Intel as well as the worst initial unemployment claims data since 2001.

In other news, a $10 Billon auction in 30-year Treasury Bonds will hit the market at 1 pm Eastern Time. If the auction is not well embraced, Bonds could face additional selling pressure.

Currently, both Stocks and Bonds continue to trade near important support levels. I recommend floating for now, but I will let you know if Bonds fall below support and a change in course is needed...more

Daily Market Watch for 11-12-08

Mortgage Bonds are trading higher so far this morning, in reaction to continued weakness in the Stock market.

Adding to the negative sentiment in Stocks this morning are the poor earnings outlooks for Best Buy and Macy’s. These negative outlooks come right on the heels of Circuit City closing 150 stores. Suffice it to say, this holiday season doesn’t look good for retailers.

There are no economic reports due out today, but at 1 pm Eastern Time the Treasury is set to auction off $20B in 10-Year Notes. If this auction is not well received, it could temper the current rally in Bonds. For now, I recommend floating as I continue to monitor the direction of Stocks and the reaction of Bond prices.

For a detailed report CLICK HERE

Did you Know 11-11-08

I invite you to view our monthly "Did you Know" by numbers...CLICK HERE

Sincerely,
John Franco
Credit Expert
Aggressive Credit Restoration Services
Office: 661.310.1514
Fax: 661.310.0447
www.ficorepair911.com
Blog: www.johnfranco.com
FOR VIDEO UPDATES VISIT
www.videosbyjohn.com

What is a Bond Coupon Rollover?

Every month the coupon "rolls over". In this case, this month's coupon is closed out and all new loans are placed into next month's coupon.

Think of it as the time they mature. The recently closed issue, loans that are satisfied 30 years from now, are packaged and sold. Because the seller or wholesale lender now has an additional 30-days, it is like having a 30-day extension on their rate lock.

John Franco
For Video Clips CLICK HERE

Mortgage Update for 11.10.08

Stocks are higher this morning on the heels of a Stock rally in China that was ignited by the Chinese government's plan for a $586 Billion stimulus package. Should Stocks hold or add onto their gains, it will likely add selling pressure to Bonds. Also adding selling pressure to Bonds this week will be auctions of Treasury Notes today and Wednesday.

In other news, the poor economy is being felt across the board, as Circuit City filed for Chapter 11 Bankruptcy and the department store Nordstrom is reporting that its growth rate is down 16%. Additionally, the automobile industry’s woes continue, as Deutsche Bank downgraded shares of General Motors from hold to sell, giving a price target of $0...yes, $0.

Currently, Bonds sit very close to both the 50 and 200-day Moving Averages. For now, I recommend floating, but I will keep you posted of any changes. The Bond market closes early today at 2 pm Eastern Time and will be closed tomorrow for Veterans Day. Stock markets, however, will conduct their normal business hours this week.

For a detailed video clip CLICK HERE

Mortgage Update for 11.7.08

The Labor Department's Jobs Report came in much worse than analysts expected, with 240,000 jobs lost in October. In addition, the Unemployment Rate jumped to its highest level since 1994.

In market news, Stocks are coming off their worst back-to-back days since the 1987 Stock Market crash. Although Stocks opened higher this morning, they could be in for more of a decline as today's poor Jobs Report sinks in. This could create selling pressure on Stocks, which may help bonds improve.

Currently, prices are battling a strong ceiling of resistance. Should prices break out above current levels, it would be very bullish. Therefore, I recommend floating, even though prices are modestly weaker right now and may even worsen slightly before bouncing.

For a detailed video clip CLICK HERE

How to Effectively Raise your Credit Score. Step 2 of 8.

Within the delinquent accounts on your credit report, there is a column called “Past Due”. Credit
score software penalizes you for keeping accounts past due, so Past Dues destroy a credit score. If you see an amount in this column, pay the creditor the past due amount reported.

Click for a VIDEO CLIP

How to Effectively Raise your Credit Score. Step 1 of 8.

1. GET RID OF YOUR COLLECTION ACCOUNTS.

Did you know that paying a collection account can actually reduce your score? Here’s why: credit scoring software reviews credit reports for each account’s date of last activity to determine the
impact it will have on the overall credit score. When payment is made on a collection account,
collection agencies update credit bureaus to reflect the account status as “Paid Collection”. When this happens, the date of last activity becomes more recent. Since the guideline for credit scoring software is the date of last activity, recent payment on a collection account damages the credit
score more severely.

This method of credit scoring may seem unfair, but it is something that must be worked around when trying to maximize your score. How is it possible to pay a collection and maximize your score? The best way to handle this credit scoring dilemma is to contact the collection agency and explain that you are willing to pay off the collection account under the condition that the all reporting is withdrawn from credit bureaus.

Request a letter from the collector that explicitly states their agreement to delete the account upon receipt/clearance of your payment. Although not all collection agencies will delete reporting, removing all references to a collection account completely will increase your score and is certainly worth the involved effort.

For more info CLICK HERE