In order to stay abreast of the rate changes in volatile markets, most mortgage originators get some kind of rate alert subscription. There are many, I am sure, and my mortgage company gets alerts as well. I found this morning’s commentary particularly interesting on two fronts.
Based on the weekly jobless claims that come out every Thursday, the morning commentary suggested that albeit still at unacceptable levels, the jobless claims seem to be stabilizing which implies that companies are not firing as many people. It went on to suggest that companies are not hiring either! What I am not sure about is whether the information implies much of anything. I think that perhaps the author may have inferred more that the data implied! There are still a lot of people out of work and losing their jobs. Just heard of one yesterday!
My second comment is relative to the private meeting yesterday, attended by Ben Bernanke and a few Senators. Our alert commentary, along with several news releases, stated that Mr. Bernanke said in that meeting that QE II would add 700,000 to 1,000,000 jobs over the next two years. It also suggested that the Fed is convinced that the additional “easing” will cause business’ to spend more, consumers to buy more and create motivation for those interested in buying a home to do so before rates go up!
So, as to inflation… keep adding liquidity (which devalues the dollar) and low inflation will no longer be a problem. Moderate inflation will be, however! But I am not sure consumers will buy more, since their dollar will buy less with the devalued currency. As to rates going up… too late. They are already going up! Today, mortgage interest rates are probably a half percentage point higher than they were a month ago!
Bottom line, maybe Wall Street likes the idea of QE (jury still out on that), but not sure it is helping Main Street! Once again, the little guy (middle class individuals) gets the short end… I guess time will tell who is right. Can we afford to wait and see!
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