Yesterday’s economic news was paltry and so was the volume . . . represented by the fact that at the close of trading, all three indices closed up, but only by single digits. Today’s volume and economic news flow is quite different, but stock indices seem to be heading toward the flat line once again. Yesterday we spoke of the focus of the rest of this week being jobs news and it starts this morning with ADP February Employment numbers.
The ADP, not historically an accurate barometer of unemployment figures, comes out every Wednesday before the Friday when the Labor Dept releases the official unemployment report. Even still, the report released this morning posted a loss of only 20,000 jobs in February -- in line with expectations. However, the January figures were revised upward from 22,000 to 60,000 . . . uuummmm . . . does anyone wonder why this report is almost useless? Wouldn’t we normally get a revision of like 10%? Not 200%? Anyway, it certainly casts a shadow on today’s number. This is the smallest number in a year, but we haven’t seen a positive number on this report since January of 2008 . . . over 2 years now.
The ISM Services Index for February reported a rise to a reading of 53.0 from last month’s 50.5, and better than analysts expectations of 51.0. Bullish traders are trying to take advantage of the news to spark a rally, but it seems to be gaining little traction thus far. Oil prices are back up above $80 a barrel, gold prices site at their high’s for the year . . . and credit markets are flat. In fact, our pricing compared to yesterday’s rate sheet is within a couple bps (1/100ths of a point). 9:55 AM GMT | Read comments(0)March 02test6:05 PM GMT | Read comments(0)5.625% Fixed jombo (30 year)
With no siginificant economic news releases today, traders turn their attention to a very busy week of economic reports still to come. Tomorrow we get the ADP Employment Report and ISM Service Index. Thursday brings us the weekly jobless claims, monthly factory orders, productivity numbers and monthly pending home sales. And of course, Friday is the big day with the government’s official nonfarm payrolls report – the official unemployment number for February. As you can see, employment (or lack thereof) rules the headlines this week. Look for weakness in stocks going forward and hopefully a betterment in credit markets.
Be sure to look at page 3 of our rate sheet which highlights our Jumbo product. The 30 year fixed Jumbo (to $1M) sports a small rebate at 5.625%! That’s pretty attractive for that loan amount, especially in light of the fact that we basically had no Jumbo product at all this time last year. Also, the 5/1 ARM is in the mid 4’s at par. We will go up to $2M on this program with some loan amount hits. The 2 programs on the page represent 2 different investors. The top investor will allow 45% back end dti, cash out and interest only. The 2nd program caps you at 40% dti, no cash out, no interest only, but will allow for 2nd homes. These are very attractive programs – if you have a loan scenario that might fit one of these products, give me a call and lets discuss.
Traders appear to have a bit of a hang over from the weekend. Either that, or the mixed economic news of the morning is not giving any clear guidance for the markets to move one way or the other. Lowe’s posted better than expected earnings and gave a mixed picture for profits for the remainder of this year. There is some M & A (merger and acquisition) activity happening this morning as two major players in the oil services industry join forces. M&A activity has been scarce for the last 18 months, and is typically a good sign of an improving market.
The Feds, in a surprise move last night, approved an increase to the discount rate from .500 to .750 – this is the rate at which the banks can borrow emergency funds from the Feds. This is seen as a sign that the Feds are starting the process of moving rates up to keep a lid on inflation. This could also possibly be seen as a sign that the Feds are somewhat encouraged about recent reports which point toward a heating up of the economy in the months to come. Although, the accompanying comment said that this is not a change from the original monetary policy.
However, the inflation report this morning shows inflation is well under control. The CPI for January, as reported this morning, increased a mere .2% month-over-month. That is a bit less than the .3% anticipated and up from the .1% posted in December. Excluding food and energy, the reading actually dropped .1% a very rare deflationary reading.
The dollar was strong earlier today pushing stock prices downward, but a report released regarding foreclosures, and a speech from Tiger Woods helped to rally stocks. Seriously . . . the Dow was down almost 20 points when Tiger took the stand to make his much anticipated apology speech, and by the time he walked away and for the next ½ hour or so, the Dow rallied nearly 50 points. CNBC showed the floor of Wall Street with traders standing still watching the monitors and listening to Tiger. What a crazy phenomenon.