Daily Commentary by Larry Baer: The number of
Americans filing first-time claims for unemployment benefits rose by 4,000 last
week to a seasonally adjusted 367,000 - a little better performance than was
expected. The four-week moving average
of claims, a better measure of labor market trends, was unchanged at 375,000 -
an indication the labor market is not really gathering direction for better or
worse.
Mortgage investors
will likely spend the balance of the day putting the finishing touches on their
pipeline risk management strategies in front of the Labor Department's release of
the September nonfarm payroll stats tomorrow morning at 8:30 a.m. ET. Employers are expected to have added roughly
115,000 new jobs to their payrolls in September, an increase from the 96,000
jobs created in August but still well below levels necessary to make any
meaningful dent in one of the worst labor markets in the past decade. The national jobless rate is expected to
tick up to 8.2% from the prior month's level of 8.1%. In my judgment a September headline nonfarm
payroll number of 125,000 or more and/or a national jobless rate of 8.0% or
less will be all it takes to induce mortgage investors to nudge rates
fractionally higher from current levels.
As
I have mentioned in this space over the past three days -- stocks remain poised
for a potential major top (a point where the last buyer has been identified and
satisfied - leaving sellers to become an increasingly dominant force in the
marketplace).
My timing models are
suggesting the period between today, Thursday, October 4th and
Friday, October 5th and the period from Thursday, October 11th
through Monday, October 15th carry a high probability of
representing a key turning point for stocks.
For what is worth -
Friday, October 19th will mark the 25th anniversary of
the 1987 stock market crash - a nasty collapse that saw the Dow give up roughly
39% of its value in a single month. If a
correction of that magnitude were to occur this time around -- the Dow would
fall from its current level of roughly 13,500 to something in the neighborhood
of 8,200. I'm not suggesting such a
thing is probable over the course of the coming month - but it is worth at
least noting that it has happened before.
In any case, a hard downward correction in the stock markets, should it
occur, will almost certainly prove supportive of steady to perhaps fractionally
lower mortgage interest rates. That is
the good news. The bad news is those
lower rates will not likely be met with increased mortgage demand - especially
on the existing and new home purchase loan side of the ledger. Heads up.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
