Economic impact of one man

Enron, Worldcom, Bernie Madoff, Tiger Woods? These scandals have cost people millions of dollars. Tiger's latest scandal is no different. The PGA Tour and people who make their living off of the enterprise known as Tiger Woods stand to lose a lot of money. The PGA Tour has seen a record amount of profits due to the interest in the number one athlete in the world. Charities, which the PGA does a great job helping in it's efforts, will certainly see this decline of revenue. The tree of the Tiger Woods branches out into many different areas. This list can go on and on. As if the recession is not bad enough, PGA and the entire golfing industry is going to have to deal with it's own financial storm. Only time will tell how much revenue will be lost and the overall effect of the incident. It just goes to show, the old adage is true, one mistake will not only effect you, but have an effect on many. Lesson to learn, never place your eggs in one basket, and anyone who is bathed in flesh will fail.

Looks can be deceiving

Behind the "good" economic numbers for home sales lies a monster. Yield curve is the steepest in history, which means banks are doing very well by borrowing at 0 and lending at high rates. Spreads are huge. With these good numbers though, you have to look deeper, the home sales are low cost home prices that were bought at distressed levels by investors and reselling them at quick turnarounds. Also people thought the November tax credit was going to end, so, Nov home sales were inflated. Also we saw GDP revised down, but no one cares. Mortgage rates rising is seen as a good thing due to economic recovery, but when all the tools are put back in the Fed's tool belt, is the building going to collapse? Time will tell, but in Q4 expect huge bank earnings which will get everyone excited. Expect good retail sales, but we are comparing these numbers to last year, which was horrible. This better than worse mentality has to stop, and let's start comparing ourselves to "normal" economic times, we'll see we have a long way to go.

End of low rates are here to stay

 

Mortgage rates today climbed today, as the Fed announced that they will be stopping their Mortgage Backed Security purchases in late March. Rates rose from 4.875% to 5.215% in two days. This is going to be interesting to see how this will effect the recovery efforts and housing. Also, the Senate made it a step closer for Health Care reform, all the HMO's rose today in trading. Add this to the list of Social security, Medicare, and Amtrak, all government disasters. I do not have to tell you that the government is the worst run business in the world.

Dollar continues to climb

Today no change in reverse momentum for the dollar trade. Gold continues to lose ground, and commodities sold off again. McDonalds reports worse than expected same store sales numbers which effected the Dow and 3M reported earnings today and gave disappointing guidance. On the rate front, we saw the 10 yr sell off at the end of the day pushing yields to a higher level. Mortgage rates rode intraday and now stands at a flat 5% on a 30 year. Meanwhile interesting weather is going to effect travel over most of the nation, everyone stay safe.

Back to life, Back to Reality

 

Markets received confidence today from Ben Bernanke regarding interest rates. His comments assured markets once again the rates will stay low for "extended period" of time. This helped the market to recover from a day in the red. Good news from after Fed Ex after the bell, gives a cheery insight into the future which may have a positive effect on trading tomorrow. Dollar weakened again which led to commodities rising and gold recovering somewhat. Now onto what really matters, did you see the football this weekend? Texas and Alabama for the National Championship game, FLA takes on Cincinnati, and the two undefeated teams Boise St and TCU go at it. Rose Bowl Ohio St and Oregon, which will be a good game. NFL, Cowboys, Steelers, Vikings, Redskins, and Patriots see gut wrenching loses. The two undefeated Saints and Colts keep rolling. Tonight, Ravens and Packers go at it, being a Bear fan, go Ravens!

Rates are on the rise to stay

This week was very volatile in the mortgage rate front. We started the week with rates at all time lows, then quickly rates rose by Friday. With the better than expected jobs report, with only 11,000 lost for Nov, the Treasuries sold off on all parts of the curve. Friday, stocks futures started up 120 points directly after the announcement, market opened up 1.5%, then as the dollar started to rise, commodities and stocks that follow started to fall. Oil then retreated and the market ended flat. My favorite stocks here would be TBT – short treasuries, and DTO, short oil. DZZ is worth looking at as gold trades starts to unwind. Key of the trading next week will be watching the VIX, which ended at 21 on the cash. Also look at GS and AAPL as they are good market indicators of what the whole market might do. If profits are recognized for the year, I'd start hedging or sell. Beginning 2010 will be interesting as people will try to guess the timing for Fed to start to retreat some liquidity from the market. Fed futures rose from 40% chance of raising rates in June to 70% on Friday.