As you all know, the Republicans took control of the House of Representatives, while the Democrats retained control of the Senate. This will undoubtedly create a “lame duck” session that will not only last over the next few months but most likely for the entire next term as the different parties fight over the direction of the country. As if Businesses and consumers haven’t already been feeling a great deal of uncertainty about the economy and legislation, this is certain to add to the confusion as the gridlock will dampen confidence even more. Continue reading →

Good Morning,
The Dollars keep coming!! Investment in U.S. debt continues to increase as the Dollar has once again become the single dominant currency of the World. Just a few months ago talk was everywhere of the dollars demise due to the Euro and now with the massive problems facing Europe, the Dollar has once again retained sole dominance at the top. Continue reading →

I have taken a number of calls regarding China’s announcement that they would allow the Yuan to appreciate against the US Dollar and what impact that may have on interest rates. China’s currency has been kept artificially weak so that Chinese goods are more affordable to global consumers giving Chinese manufacturers an edge over the competition. Continue reading →

Good day. Some recent events are causing some concern about the inevitability of higher interest rates in the mid to long term. The Fed has announced that it will not extend its program to purchase U.S. Treasuries and mortgage backed securities bringing to an end the $1.20 Trillion program. In a recent speech, the Fed announced that while it will keep short term rates at or near zero, they will begin to slowly reduce their balance sheet by selling off portions of the debt that have purchased over the last 12 months. This in addition to the record amount of debt being issued will put upward pressure on interest rates. Continue reading →

Clearly, we’re in the worse recession seen since the 1930’s. Unemployment continues to rise and is over 12.7% in Los Angeles, while the rest of the country is not far behind at 10% . If you include those who have had their benefits expire, we are well north of 17%. That’s one in six people that are ready, willing and able to work that are unemployed. Continue reading →

Good Morning,

Clearly, we’re in the worse recession we’ve seen since the 1930’s. Unemployment continues to rise and is over 10% and if you include those who have had their benefits expire, we are well north of 15% with some estimates over 17%. That’s one in six people that are ready, willing and able to work who are unemployed. Given current employment conditions, the Federal Reserve decided to not only leave rates unchanged but left language indicating that rates will remain low for the foreseeable future as there are to many signs of weakness still plaguing the economy. Continue reading →

A recent survey conducted by the National Association for Business Economics concluded that more than 80 percent of economists believe the U.S. recession is over and an expansion has begun, but they expect the recovery will be slow as worries over unemployment and high federal debt persist. Continue reading →

Federal Reserve yesterday decided to leave rates unchanged which is not a surprise at all but what was a surprise to the market was that in their statement, the Fed indicated that they would not increase the amount of Mortgage Backed Securities they are buying above the $1.25 Trillion that they have committed to. This is a bit troublesome as the Fed’s departure from this market will most likely mean higher residential mortgage rates in the near future. The program was scheduled to terminate at the end of the year but the Fed extended the term through the end of the first quarter of 2010. This will give the Fed more time to wean off the program slower and enable the mortgage backed securities market to stabilize given the departure of such a large buyer. A sudden end could create a very rapid increase in rates for an already fragile market. I don’t see how the open markets will be able to absorb the vast amount and fill the gap that will be left with the Fed’s departure and rates will most likely have to rise in order to attract more buyers to the market. Continue reading →