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7/10/2010

Attractive mortgage rates have raised demand for home refinancing loans in recent weeks. They have failed to increase appetite for mortgages to purchase a home, a trend that does not bode well for a housing market that still faces a huge imbalance between supply and demand. Rates on 30-year fixed-rate mortgages, the most widely used loan, averaged 4.57 percent for the week ended July 8, down from the previous week's 4.58 percent and 5.20 percent a year earlier, according to the survey, which started in April 1971.
    
China's State Administration of Foreign Exchange (SAFE ) is once again making waves, by reminding the world about its trillions in dollar-denominated holdings, and that these could be dumped in a heartbeat. Of course, in tried and true Chinese fashion, it is notifying the world it has no intention of using the "nuclear option" which of course is merely a reminder that the nuclear option not only exists but is certainly at the forefront of any "diplomatic" negotiations with the US.
    
One positive thing is happening in the back¬ground while consumers and businesses stand aside.  The system is building up cash that will eventually serve as the foundation of a new bull market. Corporate earnings have been extremely strong, but companies are tending to stockpile cash on the balance sheet instead of committing funds for expansion. Consumers, both in the U.S. and developed Europe, are now saving more than they are borrowing.  Net consumer credit is dropping for the first time in memory.

Stack of Stuff:

The Seven Sins of GLD

A Little Economic Realism

 
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