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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (5038)	1/14/2004 11:52:31 AM
From: mishedlo	Read Replies (1) \| Respond to of 110194

i would say in an environment with zero pricing power and zero real income growth, higher energy and food prices are simply a tax on consumption and are thus DEFLATIONARY--X percent more money which is no longer available to inflate housing or buy more new cars or whatever. just another straw weighing on the back of the coming asset and debt deflation. ding ding ding ding ding ding ding! Darfot get's the cigar M

To: Wyätt Gwyön who wrote (5038)	1/14/2004 12:48:18 PM
From: russwinter	Respond to of 110194

<higher energy and food prices are simply a tax on consumption and are thus DEFLATIONARY.> Yes, I agree, however, and this is the key point, hyperstimulative interest rate levels merely adds additional fuel to higher energy, food and other input costs. So much so that it even gets a certain speculative glow to it. Talking it down, or jazzing economic reports, may cause a few specs to sell, but that will be brief. And convincing the Europeans to cut rates? Well, I don't even have to say. However, the underlying trend of excessive demand, bottlenecks and shortages will continues on until, one of two things happens: the CBs take the steam out of it, with tightening, or the economy breaks. The world needs another refi debt induced consumer spending boom right now, like it needs a bullet in the head. WASHINGTON, D.C. (January 14, 2004)—The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending January 9. The Market Composite Index of mortgage loan applications-a measure of mortgage loan applications for purchases and refinancings-increased by 17.1 percent to 702.6 on a seasonally adjusted basis from 599.9 one week earlier. On an unadjusted basis, the Index increased by 71.9 percent compared with last week and was down 42.9 percent compared with the same week one year earlier. The MBA seasonally adjusted Purchase Index increased by 11.1 percent to 445.9 from 401.3 the previous week. The seasonally adjusted Refinance Index increased by 25.1 percent to 2195.7 from 1755.4 one week earlier. Other seasonally adjusted index activity included the Conventional Index, which increased 13.9 percent to 948.2 from 832.2 the previous week. The Government Index increased 38.0 percent to 292.7 from 212.1 the previous week. The refinance share of mortgage activity increased to 51.6 percent of total applications, from 49.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 26.6 percent from 30.3 percent the previous week. "Of interest is that overall applications for the first full week of the new year were up by more than 11 percent from the last full week before Christmas (week ending 12/19/03), with the purchase market up 8 percent and the refinance market up 15 percent," said Michael Cevarr, MBA's manager of member surveys. The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.56 percent from 5.81 percent one week earlier, with points decreasing to 1.38 from 1.43 the previous week (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.87 percent from 5.13 percent one week earlier, with points decreasing to 1.31 from 1.41 the previous week (including the origination fee) for 80 percent LTV loans. The average contract interest rate for one-year ARMs decreased to 3.43 percent from 3.45 percent one week earlier, with points increasing to 1.07 from 0.99 the previous week (including the origination fee) for 80 percent LTV loans.