Jun. 27, 2007: Mortgages: “rally in the alley”! And humor in the workplace?

Jun. 27, 2007: Mortgages: “rally in the alley”! And humor in the workplace? Rob Chrisman

30-yr A-paper prices are better by .125-.250 this morning. What’s up with that?

• Yesterday New Home Sales were weak, as expected, declining by 1.6% from April. The inventory increased to 7.1 months and the median sales price for new houses was $236k. Versus a year ago, sales are down by almost 16%. Interestingly sales surged in the Midwest (up by over 30%), while the Northeast was -11%, the South was -7%, the West was -2%. Were you aware that the South accounts for more than 50% of the nation’s new home sales!
• The $18 billion 2-year note auction went well yesterday, better than last month’s.
• Bill Gross from PIMCO stated that he felt that the problems in the sub prime market are going to channel into the prime markets. He is back once again calling for the Fed to lower rates by the end of this year, although he has been wrong for over a year now.
• The two day Federal Open Market Committee meeting begins today, with the announcement tomorrow (late morning). Expect no change.
• Orders for U.S. Durable Goods fell more than forecast in May, -2.8%, the first drop in four months. The decline was led by fewer orders for aircraft, metals, and machinery. A reluctance to buy new equipment, along with a lingering housing slump, may call into question Federal Reserve forecasts for gradual improvement in the economy the rest of this year, economists said. Policy makers, meeting today and tomorrow, are projected to hold interest rates unchanged. It may be that businesses are increasingly cautious about spending money.

Impac Mortgage announced that it will not pay a dividend this quarter due to “higher than expected losses from the disposition of REO.” Impac is selling their real-estate-owned through an auction process in order to mitigate losses, and the company is concerned that prices could deteriorate further.

I urgently needed a few days off work, but I knew the Boss would not allow me to take leave. I thought that maybe if I acted “crazy” he would tell me to take a few days off. So, I hung upside-down on the ceiling and made funny noises. My co-worker (who’s blonde) asked me what I was doing. I told her that I was pretending to be a light bulb, so that the Boss might think I was “Crazy” and give me a few days off. A few minutes later the Boss came into the office and asked, “What are you doing?” I told him I was a light bulb. He said, “You are clearly stressed out. Go home and recuperate for a couple of days.” I jumped down and walked out of the office… When my co-worker (the blonde) followed me, the Boss asked her, “And where do you think you’re going?!” She said, “I’m going home too. I can’t work in the dark.”