The Weekly Rap! Friday Sept 7, 2012

The Dow is currently trading at 13,227 higher by 177 pts over last week  The S&P 500 is trading lower at 1,435.  Gold is trading at $1,739 an ounce, while oil futures at $96.10 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.87/Gal.

Yields on 10-year notes, which move inversely to prices, are trading at 1.65%.  30-year bond yields are trading at 2.81%.

Mortgages or FNMA 3.5% MBS (Mortgage Backed Security) is currently at 106.00.  On July 25 we reached an all time high (Price) of 106.31.  Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate.

In economic news this week; The Institute for Supply Management manufacturing index, a gauge that measures the strength of the factory sector fell to 49.6% and remained below the 50% mark for the third straight month, stirring fears that a slowdown in manufacturing is lingering. It’s the first time there have been three-straight sub-50% readings since the summer of 2009. Faced with soft consumer and foreign demand, manufacturing production has slowed notably in the past six months.

The Labor Department reported that workers were slightly more productive in the second quarter than initially thought as inflation remained tame.  Productivity of the U.S. nonfarm business sector rose at a 2.2% annualized rate in the second quarter, stronger than the 1.6% pace estimated a month ago.  Productivity, defined as output per hour worked, is perhaps the most important long-term variable in economics.  Higher productivity can mean higher profits, wages and living standards and can keep inflationary pressures at bay.

Job growth slowed sharply with Nonfarm payrolls growing by a only 96,000 in August well shy of estimates and down from 141,000 jobs added in July. The report is reinforcing concern about the weak labor market and triggering speculation that the Fed Gods may take aggressive action to support the U.S. economy which is helping to drive interest rates lower.

Since the beginning of the year, job growth has averaged 139,000 per month, compared with an average monthly gain of 153,000 in 2011.  The disappointing report also came as unwelcome news for President Obama, who actually knew of the news before he gave his acceptance speech at the National Democratic Convention last night. I have to say, he has a great poker face!

Meanwhile, the nation’s unemployment rate fell to a seasonally adjusted 8.1%, down from 8.3% in July.  The decline in the jobless rate hardly came as good news, however, because it reflected 368,000 people dropping out of the labor force. In other words so many people gave up on looking for employment that it affected the rate.

And now for the Rant:  OK it’s time to talk politics!  Really? you ask.  Is he really going to commit to one side?  Am I going to risk alienating some readers?  Not so fast, I’m going to keep you guessing.  My rant today is directed at both major parties.  I actually watched both national conventions trying to analyze both objectively.  And here’s the rant; please keep an open mind, always do your homework, never trust an advertisement, and this is a biggie…  Please read between the lines and see how the truth could be twisted before you instantly believe something!

What I noticed was there were a lot of grey areas mentioned, duh no surprise there.  There were very few solid promises made, again, duh no surprise there either.  But there was a lot of thunderous applause.  I think when you sift through all the political stuff, when voting for president it doesn’t matter if you’re Democrat, Republican or Independent, it comes down to what they can control and whom will be a better overall leader.  Believe me, the truth often gets buried under an avalanche of money and advertising.  Please feel free to chime in and voice your opinion.  I love feedback and you can’t offend me.  This is my reality show!  It’s my opinion and I’m sticking to it!

If you know anyone who can benefit from my services, please call me.  My greatest goal is to see clients and friends happy.  I guess that’s why I love providing mortgage financing.  It’s an immediate gratification when you can help someone purchase a home, or lower their payment on their existing home.

Bill Bartok

Mortgage Advisor

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