Wednesday, November 02, 2005

Rapid Fire

Okay, well, there’s been some serious stuff happen the last couple days and I have had no time whatever to comment.  So here’s our take in rapid fire:

Scooter Libby’s indictment: uncertainty in government is bad for the economy and good for the bond market, which means good for mortgage rates.  In this case, the indictment is weak and Scooter is nobody, so he uncertainty is muted and will have no real impact on the stuff that matters to us in this forum.  This could change, but I think there’s less than 5% chance that any significant turmoil will result from the trial.

Samuel Alito’s appointment: Alito is aggressively pro-business and pro-law, whatever else he is.  The battle over his appointment will be hot but I believe it will be sound and fury signifying nothing and he will be confirmed without destroying the fabric of the Republic.  Should have very little impact on financial markets, but what impact it has will be good.

Fed movement: the Fed did what everyone on earth expected and raised rates by .25% again.  This will happen at least two more times before the end of January, just bank on it.  That means that Prime moved to 7% this morning and everyone’s HELOC went up another .25%.  If you are on an Option ARM, watch for another rate increase in December.  The move further flattens the yield curve, which is bad for mortgage rates, and it makes a recession more likely without doing anything whatever to keep inflation low.  We’ve been through this before in this forum.  Short-term ARMs also became a worse deal versus the 30-year fixed.

Rate movement: Everyone is reporting that rates are on the rise, and they are.  This means that for A-paper borrowers things are not as rosy as they were in June, or heavens, in Blessed June of ’03.  The 30-year fixed is hovering at about 6.25% and the 15-year at about 5.75%, depending on a huge number of other factors.  The 5-year ARM is about 5.75% as well.  Short-term adjustables have become a far worse deal than before.  Tomorrow we’ll have a dissection of the impact of rising rates on home prices, which you are absolutely not going to want to miss.

BYU’s crushing of Air Force: Gotta love the scrappy Falcons, but BYU is showing power on the offensive line that makes Cougar fans weak in the knees.  Any time you score 62 points and roll up almost 700 yards of offense without a single play of more than 40 yards that has to scare people.  UNLV is next, and it will not be pretty in Vegas.

CSU’s demolition of UNM: the Rams were totally outplayed in the first half, then did not allow the Lobos to cross their own 40 yard line in the second half.  I have no idea what happened.  But CSU/TCU for the Mountain West Championship suddenly looks like a good game to see.  Not that it’s televised.

Twelfth Night: We’re doing our Third Annual Twelfth Night Benefit on January 6 at the Apollo Dance Hall in American Fork (50 East 50 North).  Dancing, partying, food, you name it, and some fellow named Osmond is going to be there.  No kidding.  RSVP required, but if you read this, you are hereby invited.


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