Forwarded exclusively by:

Anthony Hood

Equity Investment Capital

Office: 949-891-0067

Email: tony@equityinvestmentcapital.com

website: www.equityinvestmentcapital.com

Monday, May 24, 2010

Last Week; interest rates fell again on a 426 point decline in the DJIA and increasing concern that Europe's economy is going to slow and drag down recovery here. The euro rallied three days last week but traders and investors appear no longer to be tying their pessimism solely to to the euro currency. Weekly jobless claims unexpectedly jumped 25K last week to a two month high of 471K new unemployment claims. What was the strong belief the economic recovery was solid has now been redefined as a potential double dip with the economy slipping on Europe's debt problems headlined by Greece. For two months after a strong run up in the equity markets most were expecting a correction in the stock market but didn't believe it would be this bad. Money running headlong to the safety of US treasuries and has allowed mortgage rates to fall to the lowest levels since the 2008 sub-prime crash.

This Week; nothing over the weekend that changed anything in terms of market sentiment. The rate markets will open stronger on Monday with some softening of the euro currency. Look for more selling in the stock market, at least early in the week. Reports on existing and new home sales will be out, recent sales data hasn't been good; even with the low interest rates after the tax credit ended it appears buyers are in retreat. Last week's MBA weekly mortgage applications for purchases fell 27%, re-finances are where the improvement has come from. This week has $113B of Treasury auctions; $42B of 2 yr notes on Tuesday $40B of 5 yr notes Wednesday, and $31B of 7 yr notes Thursday. Normally Treasury auctions add pressure to the bond market but the conditions these days are more about safety than concerns over demand. That said, with interest rates so low now it will bring the question and some concern investors won't be stepping up with the same intensity as they have been. That argument however, may not hold as the investment world is all about safety these days as the uncertainty over economic expansion is increasing rapidly.