Frivolous Spending. Parenting Advice Requested. Yesterday I told you about my son’s offer to pay me $57 so he wouldn’t have to take a bath. Despite my acceptance, he breached our verbal contract…but that was a different story. But now he wants to spend $20 on Animal-Jam, an online gaming site for kids. I am already spending $5/month for each of my kids to access this site, but now they are enticing him to spend more money for “diamonds” whatever the hell that is. And here’s my dilemma, do I let him spend his money on this crap or forbid it? I mean, it’s his money…he earned it. But how do I teach him that this is throwing his money away? The way I see it I have 3 choices: (1) let him spend his own $20 and learn the hard way, (2) just flat-out tell him he can’t spend his money on that crap, and/or (3) tell him that if he wants to spend his money on frivolous stuff I will end his membership to the site. Any parenting advice?
MARKET UPDATE (April 3, 2015)
The Fannie Mae 30-year bond is up +36bps since yesterday’s close. Generally a lender’s pricing improves when the bond is being bought. Bonds reached +56bps but traders sold off some of those gains and it settled at +36bps.
SURPRISE SURPRISE SURPRISE! This morning’s Jobs Report came as surprise:
Market expectations: 230,000 new jobs, 5.5% Unemployment Rate
Today’s Report: 126,000 new jobs; 5.5% Unemployment Rate
That’s significantly less than expectations and traders jumped all over it by investing in safe bonds. If traditional behavior is any indication of what would happen, then traders would have sold off stocks upon hearing
the negative economic report, thus paving the way for investments into bonds, but the stock market is closed for Good Friday, or Passover if you please. What will happen Monday morning? Will traders sell off stocks in respond to this morning’s report? Monday is a long ways away…a lot can happen between now and then…if anything dramatic happens over the weekend it will influence trading Monday morning.
In the meantime, since the Jobs Report was so far off expectations with 104,000 fewer new jobs, I can’t help but think that traders will sell stocks on Monday. If they do, we could see more investments into bonds and if that happens, our rates will get even better. If you follow my analysis, then you would float your locks and wait to see what happens Monday morning. But I must remind you, by the time the market opens Monday morning, things could have already shifted and today’s bond gains could be wiped quickly. It’s a tough call. I can’t remember this scenario of bonds trading without any movement in stocks…it will be interesting to see how it plays out…
Read this: U.S. Economy Gained 126,000 Jobs in March, an Abrupt Slowdown in Hiring
ON WISCONSIN! My Facebook blew up this weekend! I got my undergrad at the University of Madison-Wisconsin…I’M A BADGER! When I went to school in 1986 our basketball team was mediocre.
I’d say we got robbed. We should have seen a bigger impact in the markets in favor of bonds and our rates should be significant improved. But alas, it wasn’t meant to be. This morning the stock market has improved and it’s sucking the gains from Friday. At least our rates came out relatively late in the morning so pricing should have the trend already factored in. But traditionally PMAC has been trigger happy to issue reprices for the worse in a flailing bond market. Therefore, if you intended on locking today, I advise you do it now before a potential reprice for the worse. Let me know if you’d like to discuss…
Today should be quiet after yesterday’s NASDAQ victory. Friday is the all important Jobs Report. The Jobs Report indicates how many new jobs were created in February. The results change the way traders interpret the economy…either stronger or weaker…and in turn affect their buying and selling behavior with respect to stocks and bonds. This week trading is only in anticipation of what the actual report will show. But when Friday hits, a reaction could be dramatic depending on how far off expectations the actual numbers report. Last month this report killed us and threw the bond market into the gutter for the entire month of February. On Thursday I’ll have some better information to share…
The stock market is performing well this morning and the NASDAQ has hit 5,000 which hasn’t happened in 15 years…this is the reason bonds are being sold off. Typically traders either invest in bonds or stocks but rarely both. Moreover, it’s a fair analysis that when traders are investing in stocks, they sell of bonds to free up capital. When they sell of bonds, our rates/pricing get worse. Similarly, when investors feel stocks are a bad bet, they sell them off and invest in safer bonds instead which helps our rates/pricing. But today the former is the case and the latter is a but a dream.
This week is full of economic reports including the all important Jobs Report on Friday. Last month this report killed us and threw the bond market into the gutter for the entire month of February. I don’t have an angle on what we might expect just yet, but as I learn more I’ll share it with you. For now, we need to send some positive energy towards that Friday report because we need it if we’re to see any attractive rates in March…
Oil prices appear to be stabilizing and that’s good for U.S. mortgage markets. Recently Jody Shenn of Bloomberg writes, “Bank of America Corp., which had been warning investors to avoid U.S. government-backed mortgage securities, reversed its call this week. The reason: oil prices are stabilizing.” Yes, oil prices have been falling for over six months, culminating to a seven-year low. The selloff in oil is helping to shrink inflation expectations with people who follow such things (that would be everyone who isn’t living off-grid in Alaska, by the way). Ms. Shenn continues, “The 10-year Treasury yields dropped to 1.64 percent from 2.17 percent at the start of the year. Average rates on typical new 30-year mortgages dropped to 3.59 percent in the last week, the lowest since May 2013, according to Freddie Mac surveys. With rates lower, refinancing applications from borrowers soared 84 percent in the last three weeks of January compared with the seasonally adjusted average last year, according to Mortgage Bankers Association data.”
The Greatest Human Behavior Experiment Ever – 30 Seasons Over 15 Years of Survivor! 
But this year is a first and should prove to be no less intriguing…”Worlds Apart” will start the show with 3 tribes split up based on social class: White Collar, Blue Collar, and No Collar. No Collar can best be described as people who break the rules, or don’t go by convention and couldn’t care less about the status quo.
Rates are better today than yesterday but that could be short-lived. Today Federal Reserve Chair Janet Yellen testifies in front of the House….yesterday she testified to the U.S. Senate. More than anything this testimony will influence traders one way or the other because she will have to answer questions about when to raise interest rates. Most traders consider this the biggest news because if the Fed times the rate hike incorrectly, it could send the U/S. economy into another depression-like period. Note the Fed hasn’t done a hike since 2006.To me rates are looking good right now…if any more information comes out I’ll do my best to deliver it to you promptly…
My guess is that many movie stars hated her guts for all the crude, obnoxious, disgusting, abusive, abhorrent, disgraceful, yet mostly funny jokes made at their expense over her career (sometimes there just aren’t enough words in the thesaurus). Their ultimate revenge…snub her at the Oscars by not acknowledging her in the In Memorium portion of the show. Mission accomplished.
If you don’t want gays in the military, make the uniforms ugly.
Could this be our week?! With a week full of economic reports, falling oil prices, and just two weeks away from a new Jobs Report, we might see some positive momentum to get us closer to where we were at the end of January.
Phil Grossfield's Blog 