New Jersey Rate Outlook

In 16+ years of being involved in financial services I have never seen such disconnect between the equity markets and the bond markets

. How is it possible to have a Dow approaching 13000 and a 10 year bond at 1.45? It just doesn't make sense. Either we are on the verge of a major spike in rates or a major market collapse. Something has to give.

This week we will get 2nd quarter GDP and see what the state of the economy is. However more importantly is where are we heading? I have repeatedly said that we haven't been getting the full truth out of Europe and what is happening there. Bottom line is Europe is in the midst of a depression handcuffed by debt; debt of failed bureaucrats and entitled programs that have gone on for generations, exasperated by little or no growth. The money that has been spent on waste and wars has come to the surface and we see what our world leaders have done with our hard earned tax dollars. Squandered it like a drunken sailor on leave in Tijuana. There is great pain that we have and will continue to face because of this fiscal irresponsibility. However, the financial crisis hopefully put a stop to this and we can rebuild a world where there are values and morals.

A world where the real working class is represented and rewarded for its contributions. Not having its back broken because of the burden to carry the debt and spending.

The gridlock in Washington inevitably continues through the election. We have come to a point of no return where both sides refuse to budge and a President who has done nothing but to create great divide. He has done nothing to bring people together for compromise and for the sake of the people. How can we have a government spending 4 Trillion a year and not get anything done?

The latest news is that the Democrats are willing to take us over the fiscal cliff, and the Republicans are willing to let it happen to prove some point that they know what is better for the economy. At the end of the day, they are all failing the American people. The lack of leadership is discouraging to say the least. Someone needs to step up and fix a broken Washington.

What does this mean for markets and interest rates going forward? Historically the market has created lows into August, and then retests them in October. In the current environment we dont know what is going to happen day to day but it sure looks like it is setting up to follow this pattern. Again, the disconnect between equity and bond markets shows that one or the other is wrong, and historically the bond market wins. I believe rates will continue to drop; we are in waters that havent been navigated since The Great Depression. The liquidity and credit that has been completed drained from Europe will have a worldwide effect. I believe the stock market retrenches at least 10% hear and the 10 year Treasury bond to test 1.28-1.33%. The major variable here is the Fed stepping in immediately to announce stimulus plans due to the lack of leadership in Congress, and the need to keep liquidity in world markets. We will have no choice but to backstop Europe through the IMF and pressuring China to do the same. More money will be thrown at this, but in the end what will be left? It will be two extremes, some economies like the U.S. staring at major deflation, and those of Greece, Spain and Italy, locked in higher prices and choking depressions.

The opportunity lies with the American consumer and the ability for most to be able to refinance long term mortgage debt into lower payments and free up cash, or reducing the term of their mortgage debt and freeing themselves up from those monthly payments sooner, with the ability to do more down the road. This is a painful process, and if you are of the school of the Japan effect, we are only way through.

Equities continue to drop, along with long term interest rates in the short term.

James M. Di Piazza

Bond Street Mortgage LLC

www.bondstreetloans.com

by: James Di Piazza

POST COMMENT

Resolving The Users Need To Merge Two Pst Files In Outlook! Accurate Conversion Of Outlook Express To Outlook Emails & Its Elements Acquire Powerful Combination Of Techniques To Migrate Outlook Express To Lotus Notes All Basics Concerning Convert Outlook Email To Lotus Notes Explained Download Outlook Pst Splitter Freeware For Certain Results How Do I Reduce The Size Of My Outlook Pst File? Download Multiple Attachments In Outlook A Way To Reduce Pst File Size! Good Selection Leads To Best Processing Of Import Multiple Vcf Files To Outlook How To Extract Attachments From Multiple Emails In Outlook? Get Easy Way To Switch Incredimail To Outlook Manually Doing Multiple Outlook Email Attachments Extraction Proves Time Consuming How To Split Pst File Prior Outlook Corruption? The Us Theater Industry Outlook To 2016 - Favorable Prospects In 3d Segment