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    Monday, August 30, 2010

    Found this pic... this takes me back

    Christmas long long ago.


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    Sean La Rue's Weekly Newsletter: The Fed revives the I-70 showdown

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    Provided to you Exclusively by Sean K. La Rue
    “Your KEY to Moving Home”    

    For the week of Aug 30, 2010 | Vol. 8, Issue 35

    Sean K. La Rue

    Sean K. La Rue
    Senior Vice President
    Franklin Loan Center
    Office: 760-837-1488
    Cell: 760-835-5663
    Fax: 800-784-9089

    Franklin Loan Center

    In This Issue

    Last Week in Review: Home sales slump, while Fed members take part in "I-70 Showdown."

    Forecast for the Week: A consumer's perspective on the job of economic recovery.

    View: Summer's not over... take a last-minute vacation with these travel tips!

    Last Week in Review

    "It all depends on how we look at things." Those words by Carl Jung describe the importance of perspective... which is exactly what last week’s economic reports on home sales require! Existing Home Sales were reported well below expectations and a significant 27% decline from last month. As you can see in the chart below, New Home Sales were also ugly - coming in well below expectations and at the lowest reading on record. But as Carl Jung said, let's take a step back and gain a wider perspective about how we look at those reports... and what they mean!

    With all due respect, the actions from the Washington academics are invariably filled with unintended negative consequences. The First Time Homebuyer Tax Credit is a good example. It's now clear that the tax credit has done more harm than good...all at an enormous cost to those who pay taxes. Here’s why: The tax credit simply rewarded those who were already going to purchase homes, as well as those who moved up the timing of an inevitable purchase. But now... the "sugar rush" is over, and the void remains. Worse yet, potential buyers are feeling reticent to make a move after "missing out" on the free money. The obvious problem that remains within our faltering economy is the job market. Yet the focus from Washington has been elsewhere. And it can be argued that each landmark passage of reforms - from aviation to healthcare to financial - has made job creations more challenging.

    But eventually we expect some better decisions to come out of Washington. This, along with time, will help the housing market and overall economy recover - making for a good long-term buying opportunity in today's market. Remember, the best investors buy during the most pessimistic times.

    To highlight this - as well as give us better perspective and some hope towards the future - here’s something that was recently pointed out by Dennis Gartman, a well-respected market analyst. Back in 1992, an article in Time Magazine included this passage:

    "The US economy remains almost comatose. The slump already ranks as the longest period of sustained weakness since the Depression. The economy is staggering under many ‘structural’ burdens, as opposed to familiar ‘cyclical’ problems. The structural faults represent once-in-a-lifetime dislocations that will take years to work out. Among them: the job drought, the debt hangover, the banking collapse, the real estate depression, the health care cost explosion and the runaway federal deficit."

    It's amazing how eerily similar the picture from 1992 compares to today. We all know that the period following 1992 included terrific growth and opportunities in the economy, stock market and housing. If history repeats itself, which it often does, this could point to much better days in the future with opportunities in the present.


    New Home Sales Hit a Record Low in July 2010

    Speaking of revisiting the past... back in 1985, the Kansas City Royals faced the St. Louis Cardinals in the World Series. This was known as the "I-70 Showdown" World Series, as I-70 is the route that connects both cities, and the road along which fans traveled between both stadiums. Lately, there's been another I-70 Showdown, between Kansas City Fed President Thomas Hoenig and St. Louis Fed President James Bullard. And interestingly enough, both Fed Presidents spoke at the ongoing Jackson Hole Symposium, which was hosted last week by the Kansas City Fed. Hoenig kicked off things with his opening speech Thursday night. While he has clearly been the most vocal Fed inflation hawk - calling for an increase in the Fed Funds Rate to at least 1% ASAP to prevent future inflation - his opening remarks were mellow.

    The next morning, it was St. Louis Fed President Bullard's turn at the plate. While Bullard has been quite the inflation dove of late - calling for the Fed to do more to prevent deflation - his remarks were rather surprising. He stated that he doesn't see a double dip recession, despite the economy being a bit softer. He further commented that he expects reasonable growth during the second half of this year and for the economy to be back on track during 2011. Those are pretty positive comments from a man who actually went right from stage to an appearance on CNBC, where he went on to state his most surprising comment, which was that the Fed has done as much as they will do for the Mortgage Backed Securities (MBS) market.

    The main event came when Fed Chair Ben Bernanke was up. In his comments Friday morning, he appeared to dismiss the deflation scenario, stating it wasn't much of a risk as the Fed has the tools to combat deflation. Those tools include more purchases of longer-term securities - and when you take this comment along with what Bullard said previously about MBS, it looks like the Fed may lean their purchases towards longer term Treasuries. This incestuous relationship between the Fed and the Treasury gives the US a license to print money at low rates, which will almost certainly end with an inflation problem down the road.

    Another tool would be lowering the interest paid on excess reserves, which may influence banks to lend out that money; however, much like pushing on a string, this has been difficult to do.

    A final tool would be signaling that the Fed will keep short-term interest rates close to zero for longer than what the market currently expects, or for an "extended period." Some are looking for the Fed to give clarity as to when they'll look to raise rates, such as an unemployment rate that dips to "x" level. But the Fed does not appear to want to be handcuffed to such a trigger, as economic circumstances contain so many moving parts.


    Forecast for the Week

    This week, we’ll get a read on the consumer perspective of the economy, with reports on Personal Income and Personal Spending Monday as well as the Personal Consumption Expenditure (PCE) Index, which is the Fed's favorite gauge of inflation. Those reports will be followed by a report on Consumer Confidence on Tuesday.

    Manufacturing will also be in the news Tuesday with the Chicago PMI, which surveys more than 200 Chicago purchasing managers about the manufacturing industry and is a good indicator of overall economic activity. The ISM Index is due out the day after that. This is the king of all manufacturing indices and is considered the single best snapshot of the factory sector.

    We’ll also see the first employment report of the week on Wednesday morning with the ADP National Employment Report, which comes just a day before the Initial Jobless Claims report on Thursday. Initial Jobless Claims fell 31,000 in the latest week to 473,000, below the expected 485,000. And while that is still bad, at least for one week it broke a bad trend of consecutively higher readings.

    But the big news of the week is expected on Friday, when the Labor Department releases the official Jobs Report for August. With so much of the economy in a holding pattern because of unemployment concerns, the markets will definitely be paying attention to this report.

    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 from the chart below, Mortgage Bonds weren’t able to close above resistance last week.

    Overall, Bonds and home loan rates ended the week near where they began, which is at historically great levels for homebuyers or homeowners looking to refinance. If you’re curious how you or someone you know can benefit from these levels, please contact me today to discuss your unique situation.


    Chart: Fannie Mae 3.5% Mortgage Bond (Friday, August 27, 2010)

    The Mortgage Market Guide View...

    Last-Minute Vacations

    Labor Day Weekend is fast approaching and if you think it’s too late to head out of town for the weekend, think again. Here are some great tips for planning an adventure, last minute or otherwise.

    Be flexible

    In order to pull off a last-minute vacation you need to be flexible with your schedule, your destination, and your service providers. Rigidity in any of these areas can easily translate into paying increased costs.

    Have a game plan

    Taking a last-minute vacation doesn't mean you shouldn't have a game plan. Start looking for deals during the middle of the week, as most airlines file their Web specials on Tuesdays and Wednesdays. If possible, concentrate on flights departing from major hub airports. And when booking your trip, be sure to include a Saturday-night stay.

    Search diligently

    There is no shortage of great websites for purchasing discounted airfares and hotel rooms. Check out:

    Don't forget about travel agents

    Many travel agents will purchase bulk deals, giving them access to better prices. It's definitely a good idea to make a few calls as part of your search.

    How about a cruise?

    Cruises can make for great last-minute vacations, especially if you live near a port of embarkation, and do not require a plane flight. Generally speaking, the price of a cruise includes your travel, lodging, food and much of your entertainment. While some additional charges will apply depending on the cruise, it is a fantastic option that allows you to see many destinations for a lower cost.


    Timeshare condos, rented directly from the owner, can offer some tremendous savings as well as more bang for your buck. While it does require diligence and common sense on your part, eBay is a great place to start your search.

    When it comes to booking a trip, last minute or otherwise, be flexible and search diligently. The deals are out there, so go out and find them! And have a wonderful upcoming Labor Day weekend.


    Economic Calendar for the Week of August 30 - September 3, 2010

    Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

    Economic Calendar for the Week of August 30 - September 03



    Economic Report






    Mon. August 30


    Personal Income


    Posted via email from Sean LaRue's Posterous

    Tuesday, August 3, 2010

    Home Path Financing - Fannie Mae Foreclosures Only!

    Check out this home loan program. Qualify NOW! Easy online at Make It A Great Day!

    Sean K. La Rue
    "Your KEY to Moving Home!"
    Senior Vice President | Franklin Loan Center | Se Habla EspaƱol
    Direct: 760-837-1488 | Mobile: 760-835-5663 | Fax: 800-784-9089
    44-800 Village Court Palm Desert, CA 92260

    Posted via email from Sean LaRue's Posterous