News You Can Use from Gary Moore

Weekend Market Update

Sept. 11-12, 2010

Unemployment data moved in a positive direction for the third straight week, and the directionality supported stocks and prompted selling of Treasuries. Mortgage rates ticked slightly higher, and stocks ended the holiday-shortened week essentially flat.

Unemployment claims fell to 451,000, a drop of 27,000 from the week before. While that is still a high number of claims, the direction has been reversed after three straight weeks of declines.

President Obama wrapped up a week-long blitz of economic proposals Friday with a press conference in which he chided Republicans and named Austan Goolsbee to replace Christina Romer as head of the White House Council of Economic Advisers.

Obama’s recently proposed benefits to small business and tax cuts for those making under $250,000 a year have put Republicans on the spot and hard-pressed to explain why they want to keep the Bush tax cuts for the $250,000-plus earners but not to cut taxes for the majority of Americans who are struggling to get by on far less. The expiration of the Bush tax cuts will put $700 billion annually back into the Treasury.

“Many of the President’s opponents suffer from either faulty memories or outright hypocrisy,” pointed out financial analyst Aaron Task in a recent Yahoo financial post. “This is especially acute when it comes to the matter of deficits, which Dick Cheney famously said ‘don't matter’ back when the GOP controlled the executive and legislative branches.”

Republicans also showed their colors earlier this summer in voting against the extension of unemployment benefits, which was passed over the Republican filibuster in the Senate.

“Unemployment benefits have been extended after every recession since World War II,” Task said. “Extending unemployment benefits is far more effective on a ‘bang for the buck’ basis at raising GDP growth than is any tax cut, particularly extending the Bush tax cuts.”

Obama faces a "damned if you do, damned if you don't" situation, Task said. “If he tries to do more to stimulate the economy (or even use the word ‘stimulus’) he's labeled a big-spending Democrat with Socialist leanings. But if he focuses on austerity and bringing down the deficit, many economists fear he'll trigger another big downturn and concerns about the banking system, as is occurring in Europe.”

Obama noted that 4 million jobs were lost in the last six months of the Bush presidency and that 3 million jobs have been added since he took office.

The 10-year Treasury note ended the week at a yield of 2.8%, which is very low but which exhibits directionality itself, closing up in yield for the third straight week.

Call me with any questions about the market or to pre-approve you for a purchase loan or to run a free analysis of what a refinance---with cash out or not---would mean for your financial bottom line. Gary Moore 615-579-8658.

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...by Gary Moore

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Cell: 615-579-8658 Toll-free fax: 866-321-6513

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