2/19/2009

President Obama is taking all the headlines of late, most recently announcing his
plan to help homeowners avoid foreclosure via two different initiatives. One is a
refinancing program for homeowners with less than 20% equity in their homes, or
who owe more than their home is worth. The second program attempts to lower
monthly payments for homeowners at risk of losing their home. As we break apart
the details of this plan, we will be giving you more information.
This morning, Bonds are trading lower as the tough multi-layered ceiling of
resistance has put a lid on any advance. A quick look at the Bond Page shows the
50-day Moving Average has been a tough level to break for the entire month of
February. Oftentimes, prices will drift lower after getting tired out from failed
attempts to break above resistance. This appears to be happening now, and has
given us a Locking bias for the past few days.
This morning's Producer Price Index (PPI) grabbed some headlines as being a hot
number, but we feel that it is more of an aberration due to one time charges, as well
as data that suggests inflation on the wholesale level will remain tame down the
road. It's funny to watch the markets looking for some inflation as "good news",
since everyone realizes deflation is a much worse problem.
Initial Jobless Claims rose by 627,000, near expectations of 620,000. A staggering
number, but what's of even greater concern is that Continuing Claims now stand at
5,000,000. Think about it. 5 Million Americans are now unemployed and cannot
find work. For many of you reading, this situation may hit close to home. Will it get
better? The answer is yes, but not right away, and it will almost certainly worsen
before the turn. Look for the worst to come over the next three months, but then
some moderate improvement should begin to follow as we head towards
the Summer.
For the most part, we have been in a Lock mode since last Thursday as the heavy
layer of overhead resistance has kept a lid on any meaningful price advances. For
now we will maintain our Locking stance as the next floor of support is still a bit
beneath current levels.