An Economy on Edge, So is now a time to refinance?
More bad news came out of Mr. Bernanke on Friday. GDP which was expected at 2.4% came in at 1.6%. Judging from the market reaction a much worse number was expected. 1.6% or 2.4% does not make much of a difference, the economy is weak and getting weaker as time goes on. More and more it seems that any recovery we have had was a direct result of the governments intervention and that very little of it was a permanent fix. Shortly after the numbers Bernanke came out and said that the Fed was ready to take additional steps to prevent a second recession.
The Fed “will do all that it can to ensure continuation of the economic recovery,” he said.
The purchasing of more government securities and residential mortgages to bring rates lower seems like a first step toward a renewed recovery. More importantly is the state of the consumer. Are they setting themselves up for a recovery? Paying down debt, refinancing existing mortgages (more on this later). The Fed Chairman seems to think so. His speech was very good and well received by the markets as stocks bounced back nicely. I have said it many times before Jobs and confidence that your current job is secure is the key. Get that right and the recovery will hold.
I am constantly being asked if this is the right time to refinance. That question is really only one that the individual can answer. For me I need to have a substantial savings, not just from the rate but from all the fees included (and there are many). Here is a worksheet from I found on Smart Money which is a pretty good guide.
Good Luck and Good Forex Trading
Big Ben and the Economy
Even Big Ben is feeling the pain. Here is a good article on the options available to the Federal Reserve.
CLICK HERE to read the article (worth the time)
Good Luck and Good Forex Trading.
Housing Prices Stumble
In another sign that the economy is not preforming well Existing Home Sales fell to the lowest level in fifteen years. The market was expecting a weaker number but the extent of of this fall certainly surprised participants. One reason given is the ending of the Federal Tax Credit which expired in April. I still think we have another leg down in prices. In my town prices are down about 20% from the peak. At this level sales initially picked up but after talking to local real estate agents it has once again leveled off. Of course it is very difficult to pick the bottom of the market and if I was in the market for a home I would not hesitate to purchase one at these levels. This, as I feel in 10 years prices will be higher. I think what is holding back Home Buyers is Fear and the lack of stability in the Job market. If people have jobs they will spend.
Outlook
I continue to look for range bound markets for the foreseeable future, with Asian Emerging Markets taking the biggest hit. I prefer to be short Dollars and Short Emerging Market currencies.
Good Luck and Good Forex Trading.
Cash is King
These are the Days when I am very glad that I am primarily invested in CASH!
The Dow Jones industrial average fell 265.42 points, or 2.5 percent, to 10,378.83.
The Standard & Poor’s 500 index fell 31.59, or 2.8 percent, to 1,089.47.
The Nasdaq composite index fell 68.54, or 1.2 percent, to 2,208.63.
Good Luck and Good Forex Trading
The Fed Delivers
The FOMC statement came out today and the Fed said it would reinvest the proceeds from maturing securities back into the market. Therefore this will stop the flow of money out of the Economy.
The central bank will reinvest principal payments on mortgage assets it holds into long-term Treasuries after judging that “the pace of economic recovery is likely to be more modest in the near term than had been anticipated,” the Federal Open Market Committee said in a statement after meeting today in Washington.
This sent the Dollar falling and Stocks higher. Emerging Markets preformed well initially but reversed direction toward the end of the session to close near the highs of the day.
Overnight the Dollar rallied as traders took risk off before the announcement. Positions were light this morning and I think initially after the announcement traders tried to reinstate short Dollar positions. I agree that the Dollar should move lower against the Euro (hearing stops building above 1.3240-50), but against EM I am not so sure. We saw strong Dollar buying from a variety of sources against Asia, and C3. I will not fight this but I will proceed with caution. A weak Dollar makes sense but against what is the question.
On the contrarian view is what I am hearing from people living and working in the region. It is booming! Restaurants are filled Bars are packed and people are spending money. This is why I am preceding with caution.
Posititons
Long Usd/Krw
Long Usd/Idr
Short Euro (very short term play)
Good Luck and Good Forex Trading
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