Weekly Update: Fed Announces a Twist

 

In This Issue

Last Week in Review: The Fed met, and inserted a “twist” into things. Forecast for the Week: A full week of economic reports is ahead, including news on inflation, the state of the economy, consumer confidence, and more.  View: No one wants to get a bad rap, especially online. Check out Part 2 of  our series on improving your online persona.

Last Week in Review

"Twist and shout." The Fed inserted a “twist” into the market last week, but only time will tell if their decision will be cause for shouting. Read on to learn what the Fed did, and what this could mean for home loan rates. The week began with  speculation that the Fed would announce “Operation  Twist” after its two-day meeting of the Federal Open Market Committee. What is  Operation Twist? Essentially,  Operation Twist  is where the Fed sells its holdings of short-term securities and Notes and then purchases longer-term Notes  and Bonds in order to try and lower longer-term rates even further.  And Operation Twist is exactly what the Fed announced, but their announcement came with some key surprises: First, the Fed’s statement was more strongly worded than expected, as the Fed said that there remains “significant” risks to the downside for the US economy. Second, the funding for Operation Twist was larger than expected, coming in at $400 Billion. Third, the Fed said they will reinvest principal payments on their current holdings of agency debt back into Mortgage Backed Securities…which led to a huge rally in the Bond Market Wednesday, while Stocks took a nose dive.  So what does all of this mean for home loan rates? The Fed’s statement has heightened pessimism, fear, and concern...and normally those sentiments help  Bonds (including Mortgage Bonds, to which home loan rates are tied) improve as  investors seek a safe haven for their money. But it’s important to understand that  even if Bonds improve, home loan rates may not improve much further.  Why? It is basic supply and demand: lenders’ pipelines have been overflowing with people wanting to refinance or purchase a home and take advantage of the  historically low rates we’ve seen. This level of volume flowing into the system has  already created a backlog of work for lenders, which means they may not pass along all the gains we are seeing in the Bond Market onto their rate sheets.  The bottom line is that home loan rates remain near historic lows, and now  is a great time to purchase or refinance a home. Let me know if I can answer  any questions at all for you or your clients.

Forecast for the Week

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Sep 23, 2011) Economic data will impact trading throughout the week by giving investors a broad look at the economy: Housing will be first up with New Home Sales on Monday.  Last week's housing data was mixed with lower than expected Housing Starts but Existing Home Sales came in on the positive side. Pending Sales will also be reported on Thursday.   The week will also give us a read on how consumers are feeling in this weakening economy. Consumer Confidence will be released on Tuesday and Consumer Sentiment will be delivered on Friday. Weekly Initial Jobless claims will also be closely watched on Thursday. The job markets continue to be a drag on the economy as each week over 400,000 people are claiming unemployment benefits. The big news this week will be the government's report on Gross Domestic Product (GDP), which will be released Thursday. With the economy slowing, GDP will be on the radar screen for signs of recessionary numbers. Also important will be Wednesday’s Durable Goods Orders, which gives us an update on consumer and business buying behavior on big-ticket items. Investors will also be closely watching the inflation figures within the Core Personal Consumption Expenditure, which is the Fed's favorite gauge of inflation and will be reported on Friday.        In addition to those reports, investors will be closely watching the movements in the Stock Market after last week's plunge. The big questions will be: How low can Stocks go? And, are we in a bear market or just a correction phase? Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, Bonds rallied last week, though they did give back some of their gains on Friday. I’ll be watching both Stocks and Bonds closely this week to see which way the markets move.

The Mortgage Market Guide View...

What Does the Internet Say About You? Part 2: Simple Steps to Improve Your Online Persona Your online persona is a lot like a credit score. It’s already out there whether you check it or not. And other people can review it at any time. The similarities don’t end there. Like a credit score, you can review your online persona and work to improve it…so when people like potential clients look at it, they’ll see what you want them to see. Step One: Evaluate Your Online Persona In order to know what your online persona looks like, you have to actually check it. So start by opening your web browser to a search website such as Google.com, Yahoo.com, Ask.com, AltaVista.com, Lycos.com, or Microsoft’s new Bing.com. Then simply type in your name and hit search. Scan through the first two or three pages to see what items are coming up most often, and make note of any negative news that you’d like to get removed. You can also do more specific searches. For example, you can type your name in parentheses along with your email address, the name of your college, your job title, a hobby, or even other people’s names. For example, you could type “your name + friend’s name” or “your name + college name.” You may be surprised what you find with some of these specific searches. Once you’ve searched your name on one site, open another and do the same thing. You’ll probably find a number of similarities, so you only need to check a few different sites to get an idea of what the Internet says about you. Remember to take specific notes about false or unflattering information. You’ll want to write down what it is, where it appears, and why it shouldn’t be there. Finally, don’t forget to search for videos and images! After all, one of your friends may have posted photos and tagged you in the photo without you realizing it. You can use some of the same sites listed above—only this time, click the video or image search button before you search for your name. Step Two: Remove Anything Negative Like your credit score, if you find information on the Internet that is inaccurate or inappropriate, your first step should be to try to get it removed. This is where those diligent notes from step one will come in handy. First, if you found something unflattering that you actually posted in the past, remove it yourself. For example, if you posted pictures or stories on an old blog, go back and remove them. In addition, take the time to go through any websites or social networking sites where you control the information. Maybe you have a blog, website, or social networking site that features pictures and text that you post. Go back through the information to make sure you still want people to see or read it. If not, remove it immediately…even if it didn’t show up in the search you conducted. Second, if you found information on other websites that you think should be removed, contact them right away. Start with the websites that have the worst (most egregious or most inaccurate) information. Using a polite but firm tone, explain what content you found on their site, why it’s a problem, and then specifically ask them to remove that information from their site. Be as specific as possible. If the information is false, say that. If the information is private and used without permission, say that. You may even want to include a link to the material to make sure they can quickly find the problematic information that you’re asking them to remove. It’s a Marathon…Not a Sprint Remember, the Internet has a long memory. So it may take some time for those negative elements to stop showing up in searches. But by removing them, you can help make sure that even if they do show up in a search, people won’t be able to actually view the detailed information when they try to click the link. When you combine the steps above with the process of adding new more professional content to your website, blog or social media sites, you’ll be able to continually improve your online persona! Economic Calendar for the Week of September 26 - September 30 Date ET Economic Report For Estimate Actual Prior Impact Mon. September 26 10:00 New Home Sales Aug 293K 298K Moderate Tue. September 27 10:00 Consumer Confidence Sept 46.7 44.5 Moderate Wed. September 28 08:30 Durable Goods Orders Aug 0.0% 4.1% Moderate Thu. September 29 10:00 Pending Home Sales Jul -1.3% -1.3% Moderate Thu. September 29 08:30 GDP Chain Deflator Q2 2.4% 2.4% Moderate Thu. September 29 08:30 Gross Domestic Product (GDP) Q2 1.2% 1.0% Moderate Thu. September 29 08:30 Jobless Claims (Initial) 9/24 420K 423K Moderate Fri. September 30 08:30 Personal Income Aug 0.0% 0.3% Moderate Fri. September 30 08:30 Personal Spending Aug 0.2% 0.8% Moderate Fri. September 30 08:30 Personal Consumption Expenditures and Core PCE Aug 0.2% 0.2% HIGH Fri. September 30 08:30 Personal Consumption Expenditures and Core PCE YOY NA 1.6% HIGH Fri. September 30 09:45 Chicago PMI Sept 54.0 56.5 HIGH Fri. September 30 10:00 Consumer Sentiment Index (UoM) Sept 57.6 57.8 Moderate

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors. As your mortgage professional, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you. In the unlikely event that you no longer wish to receive these valuable market updates, please USE THIS LINK or email: jeffporter.svm@gmail.com If you prefer to send your removal request by mail the address is: Jeff Porter Sun Valley Mortgage Services, LLC 11576 South State St. Unit 301 Draper, UT 84020 Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated.   Mortgage Success Source, LLC does not grant to you a license to any content, features or materials in this email.   You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.

Inflation heats up!

Last Week in Review: Inflation is heating up, but what does that mean for home  loan rates? Forecast for the Week: Several pieces of housing news will hit the wires, plus the Fed meets. View: No one wants to get a bad rap, especially online. Check out these tips  for building your brand on the web.

Last Week in Review

"Inflation, all we've never wanted." The Go-Go's may have sang about  vacation being all we've ever wanted in the 1980's, but if we were to re-write the lyrics about last week, we could sing about inflation. Read on to learn why this matters.  We saw a double dose of inflation news last week and while the Producer Price Index (which measures inflation at the wholesale level)  remained unchanged in August, the year-over-year Core Consumer Price  Index (CPI) jumped up to hit the upper-end of the Fed's threshold of 2%.  So why is this significant? The concept is very simple: If inflation rises,  investors in Bonds demand a higher yield to offset the lost buying power  inflation imposes on a fixed payment. And as home loan rates are tied to  Mortgage Bonds, this would mean home loan rates move higher.  What’s more, in light of last week’s higher consumer inflation reading, the Misery Index—which is the Unemployment Rate (9.1%) plus the level of year-over-year headline Consumer Price Index (3.8%)—is at a disconcerting  12.9, which is the highest in nearly 30 years. Our great country needs a whopping  dose of certainty, clarity and confidence...and in the absence of it, this index will continue to rise. Remember: Once inflation starts to emerge it can manifest rather quickly.  Future  inflation readings will be closely watched to see if a trend higher is emerging, and last  week’s elevated number will certainly heat up the debate surrounding more stimulus, as more money into the system fuels inflation further. If inflation heats up even more,  the Fed will likely back off their "low rates until mid-2013" mandate. Inflation really does  change everything, and I will continue to follow this story closely and keep you informed.    The bottom line is that home loan rates remain near historic lows, and now  is still a great time to purchase or refinance a home. If I can answer any questions  at all for you or your clients, call or email me anytime.

Forecast for the Week

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Sep 16, 2011) This week we’ll see less economic data than last week's litany of reports…but that doesn’t mean  there won’t be some big news to watch! Housing Starts for August will be delivered on Tuesday and are at extremely low levels given the current environment. The July reading was down 1.5% from June…but it was actually up 10% from a year ago in July 2010. Building Permits, a sign of future construction, will also be released on Tuesday.  More housing news follows Wednesday with the Existing Home Sales Report. Also on Tuesday and Wednesday is the regularly scheduled Federal Open Market Committee meeting. With inflation heating up, it will be important to see what the Fed has to say. Weekly Initial Jobless Claims will be reported on Thursday as usual, and they continue to remain above 400,000 rising to 428,000 last week.  Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, Bonds and home loan rates did not react well to last week’s inflation news. I’ll be keeping a close eye on what happens this week.

The Mortgage Market Guide View...

What Does the Internet Say About You? Part 1: Building Your Brand Online Managing your online persona is all about building your brand. That means taking a proactive role in determining how people see you when they search for you on the Internet. Here are a few simple ways you can take control of your online persona: Create a Profile: One of the easiest ways to make sure positive attributes, qualifications and accomplishments stand out on the Internet is to create a profile that features those aspects. A profile only takes a matter of minutes to create and can help boost positive information about you higher in an Internet search. One of the best profiles to start with is a Google profile. Once you create a Google profile, your name, occupation, location and a photo (if you upload one) will appear on the first page of Google when your name is searched. Participate in Social Networking: You’ve no doubt heard about popular social networking sites like Facebook.com and LinkedIn.com, as well as micro-blogging sites like Twitter.com and online photo sites like Flickr.com. These sites offer you fun, interactive ways to connect with potential clients, peers, and of course family. In addition, they are great for improving your online persona because they often climb near the top of searches. That said, there are few things to keep in mind. First, you need to “participate” not just “join.” The more information you include in your profile and the more you participate, the more useful these sites will be in building your brand. Second, when you do participate make sure it’s relevant. Your status updates don’t have to be all business and no play; it’s okay to have a balance of your personal and professional life on these sites. But make sure that you keep it appropriate. That means keeping slang to a minimum and avoiding inappropriate words, humor, photos or stories. Finally, make sure you take advantage of other online communities or discussion threads hosted by professional organizations. Not only will your peers and potential clients get to know you on those sites, but your posts will often find their way into your search results. But remember: make sure you only join online groups or communities that reflect the positive image you’re trying to portray. Before joining any group or discussion thread, ask yourself if you’d feel comfortable discussing your membership in that group during a meeting with a client. Start a Blog or Website: One of the most productive ways to control your online persona is to create new content on a blog or website that highlights or reflects your expertise. A blog or website not only gives you the space necessary to regular write about your areas of expertise, but they can also rank high in Internet searches if the content is updated regularly. While this step may seem a bit overwhelming at first, a number of providers such as Wordpress.com or Blogger.com make it fast and convenient. You don’t need to know how to program html or JavaScript. They do all the work for you. All you have to do is sign-in and post. So what should you post? Use your imagination. But remember to take the pressure off yourself – after all, you don’t have to write a professional white paper in every post. Maybe you want to post about the top three things you learned at a professional conference and include a link to the conference website. Maybe you just received an award or professional certification… write about that and put a link to the site that awarded it. As long as you’re not divulging trade secrets, write about what you do, what you know, and what your job growth goals are for the future. Interlink Your Sites: Once you’ve created a few online profiles, started participating in social network sites, and developed a quality blog with a few posts, it’s time to make sure people notice. That means promoting each of these sites in other sites by linking to them. So, on your Facebook page, you should include links to your Twitter account and your blog or website. On your blog or website, create a Contact Information page that includes links to your online profiles, Facebook page, Twitter account, and so on. On your profile pages, include links to your blog and social networking sites. It sounds a bit repetitive, if not overkill. But it’s not. It’s important. Why? The simple reason is that links are factored into Internet searches. When someone does a search of your name on the Internet, the sites that typically rank the highest have the most sites linking to them. That means, the more sites that link to your blog, the better chance you have of it hitting the first page of search results. And that’s the ultimate goal here…getting the positive information that you create to rise to the top, so people see the online persona that you’ve strategically developed and that you want them to see. Economic Calendar for the Week of September 19 - September 23 Date ET Economic Report For Estimate Actual Prior Impact Tue. September 20 08:30 Housing Starts Aug 575K 604K Moderate Tue. September 20 08:30 Building Permits Aug 575K 597K Moderate Wed. September 21 02:15 FOMC Meeting Sept .25% .25% HIGH Wed. September 21 10:00 Existing Home Sales Aug 4.50M 4.67M Moderate Thu. September 22 08:30 Jobless Claims (Initial) 9/17 412K 428K Moderate Thu. September 22 10:00 Index of Leading Econ Ind (LEI) Aug 0.0% 0.5% Low

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors. As your mortgage professional, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you. In the unlikely event that you no longer wish to receive these valuable market updates, please USE THIS LINK or email: jeffporter.svm@gmail.com If you prefer to send your removal request by mail the address is: Jeff Porter Sun Valley Mortgage Services, LLC 11576 South State St. Unit 301 Draper, UT 84020 Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated.   Mortgage Success Source, LLC does not grant to you a license to any content, features or materials in this email.   You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.