The Europe Debt Crisis is a problem, no it’s not…yes it is…no it’s not...yes it is………….

Never in my life have I seen the craziness of the media changing their story literally every single day. How in the world is it possible that a financial crisis of the magnitude Europe can change on a daily basis?

One day the stock market rallies because the media says the Euro crisis seems to be under control. The next day it seems like Italy is sure to default on their debt and the stock market plummets almost 400 points. Then the next day there is once again hope and the stock market goes up 275 points. (I just don’t get it) On the U.S. front, there was little economic news this week that moved the markets so we relied on Europe to give us an ulcer.

Mortgage rates once again started to rise slightly. However, the recent rate drops drove more buyers to purchase and more homeowners to refinance. The MBA reported that purchase applications increased 4.8% last week while refinances jumped 12.1%.

First Time Jobless Claims dropped 10,000 from the prior week down to 390,000. This is cause for optimism as this is this is the lowest we have seen claims since April. In addition, continuing claims have also been trending downward over the last few weeks. Let’s keep our fingers crossed that this trend continues.

Despite the stock market losing almost 400 point in one day, it will finish the week up approximately 150 points. The improvement in the employment picture combined with, at least for the moment, the latest plan for saving the Euro, is giving cause for market optimism.

Friday is Veteran’s day and government offices are closed however the stock market is open. Trading volume is lighter than normal as many schools and banks are also closed and many investors seem to making it a long weekend.

In a final note, do you remember all the political wrangling that went on in regard to the debt ceiling?

In addition, do you remember that in order for the debt ceiling to be raised, Congress created this Super Committee that would have to come up with a debt plan by November 23^rd otherwise massive Federal cuts would automatically be triggered?

Well…all indications are that the Super Committee is most likely not going to come to an agreement. So what does this mean? IT MEANS ABSOLUTELY NOTHING!!!

The November 23^rd deadline is virtually meaningless because Congress has the power to extend the date. So in other words, this drop dead date was nothing more than a political agreement that posed no real dooms day scenario for the Fed. (Please understand that Congress would have to agree to extend the date however the odds on them not doing that are slim to none.) With an economy as fragile as ours, do you think either party is going to let these massive Federal cuts go into place creating the real risk of us falling back into a recession?

This week there are many economic reports that may have a significant impact on market movement:

• Tuesday November 15^th – Producer Price Index and Retail Sales
• Wednesday November 16^th - MBA Applications, Industrial Production, CPI and Housing Market Index
• Thursday November 10^th - First Time Jobless Claims and Housing Starts

Your Mortgage Consultant,

JJ Mack

916-517-1800