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Market Commentary: Christmas Stats

December 25, 2008 – 9:23 pm

First the good news. Mortgage applications were up 48% last week. Just the fact that low interest rates are attracting applications for new and refinanced loans will benefit the banking industry. One major problem they are dealing with is the falling value of their current loan portfolio of mortgages and new loans will help set a floor in value on that portfolio. Meanwhile they are financing with stronger and more credit worthy clients as their requirements are strict, maybe too strict. With a flurry of loan applications, competition may not only loosen the standards but lower rates even further. 

Durable goods orders for November fell 1% while most experts expected a 3% decline. However, if you take out transportation, sales were actually up 1.2%. However, the problem was the month before when sales fell 6.6% then revised to a fall of 8.4%. Still, looking forward, this is an improvement.  

Retail sales fell .6% for November as the expectations were for a .7% decline. That was a number that should not surprise anyone. The news is still bad though not as bad as October. I guess we look for rays of sunshine where we can find them and it appears that the only ray is mortgage interest rates. Frankly, I think they may come down more. The economic slump we are in started with housing and bad mortgages; maybe new mortgages and housing will lead us out. It will be slow if it does. 

Good Trading
Steve Peasley

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