8/25/09

Good morning. In news that was not news, President Obama announced he will re-appoint Ben Bernanke to another four year term as head of the Fed. The stock market likes the re-appointment and the DJIA futures index at 9:00 +51 points. At 10:00 the Conference Board released its consumer confidence index. All components in the data were better than expected; current conditions and expectations were up from July. The reaction was as one would expect, the 10 yr and mortgage prices declined and the DJIA jumped higher.

Treasuries and mortgage rates are presently stuck in a very narrow range. We expect a nice move lower in the rate markets in Sept; the timing based on when we get that long awaited equity market pullback----and we will see it. The higher up the ladder, the bigger the fall. To finally trigger the start will take a market wake up call, so far that hasn't happened. Let me know if you have any questions.