Morning Market Update for Monday, March 2

Well, hang on to your hats, it’s going to be an interesting week (to say the least!)

• AIG announced a $61 Billion loss for the 4th quarter of 2008.   They also announced that they are getting an additional $30 Billion from the US government in an effort to stay afloat.   From what I’ve been able to read, it sounds like the far reaching effect of a default by AIG would be really really bad.   But at the same time, according to my calculations, they’ve lost a little more than $28 Million per hour in the 4th quarter.   That works out to $470,000 per minute or about $3.7 Million in the time it takes me to write this.
• HSBC announced that it is basically pulling out of the United States as it’s earnings fell by 70%.  It’s going to try to raise $17 Billion in additional capital.    Good luck with that.
• The CEO of Freddie Mac resigned today.   Said he wants to go back to the banking industry.   Ask yourself a question - if someone wants to go into banking in this market, they must really want to get out of their existing job, don’t you think?
• Consumer Spending and Income both posted surprise gains in January.  While not discounting it, remember that one report does not a trend make.

There are a LOT of economic and financial reports due out this week.   The biggest ones are the jobs report for February that comes out on Friday and the report that is supposed to come out on Wednesday about how Fannie and Freddie are going to do 105% loan to value refinance loans.

So what’s up so far with mortgage rates?   Nothing.   We’re still at 5.25% for a 30 year refi and 5.0% for a 30 year purchase with 0 pts and a 720 credit score or higher.