The Weekly Rap! Friday Nov 15th, 2013

Happy Friday,

The National Debt is currently: $17,143,678,369,783.00 I post this so we will be aware of what we are leaving the next generation.

The Dow last traded at 15,924.  The S&P 500 is trading at 1,792.  Gold is trading at $1,288 an ounce, while oil futures at $93.90 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.29/Gal.

Yields on 10-year Treasury notes, which move inversely to prices, last traded at 2.71%.  30-year Treasury Bond yields last traded at 3.80%.  Rates on 30-year fixed-rate mortgages are a hair above 4.375% this week. MBS yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. Rising yields mean higher consumer-mortgage rates.

The FNMA 30-year fixed 3.5% coupon, containing 3.75% – 4.125% mortgages, pretty much the benchmark or how rate sheets are priced these days  is currently trading at 101.43 about a .50 points (fee) better in price than where we were last Friday at this time.  Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate.  The higher the number (price), the better the rate.

In economic news this week; the reader’s digest version is there was no much in the way of news this week other than the U.S. dollar fell, while gold and Treasurys rose, after the nominee to head the Federal Reserve Janet Yellen suggested that the central bank needs to continue supporting the economy with stimulus.  Stocks also edged higher, after benchmarks closed the trading day at record highs.  In a statement released late Wednesday, she said that the job market and economy are “performing far short of their expectations.

According to the National Federation of Independent Business’s small-business optimism index, (now that’s a mouthful), small-business optimism dropped to 91.6 in October from 93.9 in September following the government shutdown.  This is the lowest reading since April with seven of the ten components negative. The biggest drop came from those who expect the economy to improve, which dropped 7 percentage points to a net negative 17%.  The average value since the recovery started is 91.

Our government began its latest fiscal year (from October to September) in the red, posting a budget deficit of $92 billion for the month of October.  The government spent $291 billion and brought in $199 billion in receipts.  OK so October, the first month of the government’s fiscal year, is usually a deficit month since there are no major payments due.  Even so, receipts or income was a record for October, up 8% from the same month a year ago on stronger individual and corporate taxes. The government is operating on a budget that expires on Jan. 15 based on their “kicking-the-can” down the road fiscal policy used to get the government back open and avoiding default on our debt.  Without new spending approved before then, the government would partially shut down AGAIN.  Lawmakers have pledged to avoid a shutdown like the one that occurred from Oct. 1-16, and a bipartisan group of lawmakers has been meeting to hammer out a deal.  Really???

On the Employment front:  The number of people who filed new applications last week to receive unemployment benefits fell for a fifth week in a row, but they remained above end-of-summer levels.  Initial jobless claims dropped by 2,000 to 339,000 last week.  Claims are seen as good proxy for layoffs, though they reveal less about hiring trends.

Mini Rant for the week: The plot line goes like this: The economy slows due to falling excessive debt burdens, and debt deleveraging.  Our politicians step in with increasingly aggressive monetary and fiscal stimulus.  The stimulus works for short period, after which it wears off, and the economy slumps again.  Then governments stimulate again, upping the ante.  We’re now in QE3 (That’s quantitative easing #3).  With each reiteration of the story, someone throws a different dress on the pig, and adds more lipstick before pushing it back out in front of the people like it’s the next best thing since sliced bread.  We’re now into year 5.  But none of them bother to ask the question: How long can this go on?

Given slowing demographic trends (we have an aging population) and ever higher debt burdens, governments will have to continue upping stimulus programs for another 10 years!  This is simply not sustainable.  We’re talking about the government growing its debt to $30 trillion by 2023… a Fed balance sheet of $15 trillion versus $4 trillion today.  The thing is that stimulus is Americans’ drug of choice, and like any drug, the more you use, the less effective it is.  Stay tuned…

I have been working with a great credit repair specialist for some time and she shares a “tip or the week” that I thought I would also share.  Please let me know what you think.  Her name is Pamela Standlee, Owner of Credit ComeBack and can be reached at in Folsom Ca.

Does a divorce decree automatically sever joint accounts?

NO.  A judge may have rubber-stamped your plans to divide credit card, car and house payments, but that carries absolutely no legal weight with the creditors themselves.  Divorcing parties must contact the creditors and either close current accounts or have the ex-wife/husband sign a letter of consent for this action. Creditors typically do a credit check on your name and if they don’t deem you financially stable to assume that $30,000 car loan, for instance, they won’t agree to remove the other person from the account.

You can visit my corporate website at:


Bill Bartok

Mortgage AdvisorMLO# 445991

The nicest compliment I can receive is the referral of your family, friends and co-workers.

Thank you!

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