I s su e 12 , Vo lu me 3 1 / Au gu s t 1 2, 201 1Four Questions around Historical Volatility The Week Ahead -> The “Keys”Tim McLaughlin - A watchful eye on the markets after a very volatile week Should the markets have reacted like they have onthe news of a Sovereign US downgrade? Fear sparks Date Economic Release Prediction Lastunexpected emotions. The downgrade, which was more of awarning to the US to get their finances in order, should have 8/15 NAHB Housing Market Index 15 15been perceived as nothing more than that. The differencebetween AAA and AA+ is like splitting hairs. France is AAA 8/16 Import Price Index (MoM) -0.1% -0.5%and their per capita debt load is significantly larger than ours 8/16 Import Price Index (YoY) - 13.6%is. This was more of a “straw that broke the camel’s back”scenario (worries of a double dip recession, concerns over 8/16 Housing Starts 610K 629Kfiscal issues in Europe, digesting what the debt ceilingagreement really means). The reaction to the downgrade 8/16 Housing Starts (MoM) -3.0% -(and all global news) appears overblown. 8/16 Building Permits 606K 617K Shouldn’t rates have increased on the downgradenews instead of rallied? In a textbook economic world, 8/16 Building Permits (MoM) -1.8% 2.5%absolutely. But the textbooks are obsolete, given the fact 8/16 Industrial Production 0.4% 0.2%that Fixed Income rallied, further supporting the thesis thatthe downgrade was more scope then substance. 8/16 Capacity Utilization 76.9% 76.7%Remember, S&P is also the rating agency that rated billionsof Subprime paper as AAA, so strength and security is in 8/17 MBA Mortgage Applications - 21.7%the eye of the beholder. And if action rings true, thesignificant rally in Fixed Income solidified the fact that the 8/17 PPI (MoM) 0.1% -0.4%US debt (Treasuries and Mortgage Backed) is as strong asever as buyers came in in droves looking for a safe haven. 8/17 ex Food/Energy 0.2% 0.3% 8/17 PPI (YoY) 7.0% 7.0% Mortgage Rates have free-fallen and the Fed came inTuesday afternoon and said Fed Funds rates would be 8/17 ex Food/Energy 2.3% 2.4%low “until mid 2013”. What does that mean? Do we golower? The statement was more of a symbol to support the 8/18 CPI (MoM) 0.2% -0.2%market then anything. Most of us already thought the FedFunds would be low for a while longer anyways. But make 8/18 ex Food/Energy 0.2% 0.3%no mistake – low Fed Funds rates til “mid 2013” does not 8/18 CPI (YoY) 3.3% 3.6%necessarily equate to low mortgage rates in the same timeperiod. For now, rates are back down at the historical lows 8/18 ex Food/Energy 1.6% 1.6%of last year. However, alternate forces (Fannie/Freddie/FHAincreasing fees, inflation, a pick up in the economy, buyers 8/18 Initial Jobless Claims - 395Klooking for alternate/higher yielding investments) all couldsend mortgage rates back up at some point in the future 8/18 Continuing Claims - 3688Kdespite where the Fed Funds rate are as the curve couldpotentially widen, which we have seen in the past. 8/18 Leading Indicators 0.2% 0.3% 8/18 Philly Fed Survey 4.0 3.2 What to do? Housing is historically affordable andmortgage rates are historically low. Looking to purchase? 8/18 Existing Home Sales 4.93M 4.77MMissed your 2010 opportunity to refinance? We can help!Ask us how and capitalize today. 8/18 Existing Home Sales (MoM) 3.3% -0.8% Mortgage Access Corp. d/b/a Weichert Financial Services, Executive Offices, 225 Littleton Road, Morris Plains, NJ 07950. 1-800-829-CASH. NMLS Company ID: 2731. Licensed by the NJ Dept of Banking and Insurance. Licensed Mortgage Banker with the State Dept of Banking in NY and CT. Licensed by the Pennsylvania Department of Banking, Mortgage Lender 21042. Licensed Lender in AK, AR, DE, MD, D.C., GA, ME, MI, MN, WI, IA, IL, IN, LA, VT, FL, WV, RI, KY, NC, ID, MS, NE, WY, OK,TN, WA. Licensed by the Virginia State Corporation Commission, License #ML105. Licensed Mortgage Lender in the Commonwealth of Massachusetts. License #ML1713, Certificate #43155. Certificate of Authority to transact business in CO, SC. Registered Mortgage Lender in TX. Licensed with the Financial Institutions Division in New Mexico, License # 01297. Licensed by the Department of Corporations under the California Residential Mortgage Lending Act. Licensed Mortgage Broker and Lender Ohio. Licensed Loan Broker and Lender Rhode Island. Kansas Licensed Mortgage Company, License #MC.0001229. Licensed by the New Hampshire Banking Department, License # 8714-MB. Licensed Oregon Mortgage Lender License #ML2528. Weichert Financial Services arranges loans with third-party providers. Equal Housing Lender.