Good Tuesday AM,

Equity markets are for the most part flat right now. Bonds seem to be looking to creep forward with the 10-yr down to 1.03% (a week and a half ago we were at 1.19%). Mortgage bonds are up as well. For us to see some real pricing improvement, the 10-yr needs to settle below 1.00% again (and for 2 days in a row). So far, we’ve retraced about 2/3 of the losses we had. Today started a bit of data (and day 1 of the 2 day Fed meeting). The data was for the most part on the stronger side. Markets though taking it all in stride as the big items are 1) the Fed statement at the end of the meeting tomorrow and 2) what will come of the new stimulus plan. There seems to be some gridlock in Washington about it. Comments yesterday were that it likely won’t be resolved until March! For now, we get to watch it unfold. I do believe we break below 1.00% on the 10-yr, it’s just timing. Without clear direction, it is always better to lock.

The topic of conversation lately is “Are we in a real estate bubble?” Bloomberg and the Census Bureau shared some insight (chart below) that I would think answers that question definitively.

“The homeowner vacancy rate is 0.9%, equaling the lowest in U.S. Census Bureau records going back to 1956. In other words, there’s a shortage of houses this time, not an excess.”

And last… there is this chart which is nothing short of alarming. The number of delinquent renters across the country exceeds 18% with California and Nevada being higher than that. Evictions will start. You need not look any further than this to know that Washington will open the check book to stop people from being homeless. The new stimulus package is going to happen. I am not a proponent for it, as I know there are other/better ways to accomplish the same result (FDR never gave a hand out), but in our media driven world, the handout is going to be the easiest answer.

Please remain safe and healthy, make today great!