Points of Interest

Our ECONOMY and the MARKETs:

There seems to be a popular misconception about interest rates and how and why mortgage rates are what they are.  The misconception I am referring to is that the Federal Reserve somehow directly affects or even sets mortgage rates.  Nothing could be farther from the whole truth.

The Fed does control certain costs of money including those lent to member banks in overnight transactions.  This is the fed funds rate.  It is a tool used to influence short-term rates.  Rates that are affected by this move include rates paid by institutions on their deposits such as you savings and short-term certificates of deposit and the prime rate which most home equity lines of credit (HELOCs) are tied to.

This is what you should know: by the time the Fed does change a fed funds rate in either direction the bond market has already priced many, if not all bonds in direct correlation to it’s perception of future economic activity.  The Fed ends up confirming what the market has already decided.

Recall that the bond market is an auction made up of bids and asks on a continuous basis.  It does not wait for a monthly meeting to set the yield.  Instead, it does so on a continuous basis.  In the past when the fed increased the short-term fed funds rate, the bond market would rally sending longer term yields down.  The perception was that the Fed was putting its brake on the economy strongly enough to slow it down and allow the longer end of the yield curve to drop.

We follow and closely monitor the yield and activity on the 10 year Treasury.  This particular bond may be one of the best indicators of future mortgage rates.  The prices paid for and the corresponding yields of mortgage backed securities (MBS) are the best, but they are more difficult to get timely and reliable data.

Right now, the 10 year yield’s 200 day moving average is pointing down indicating a downward pressure on rates.  Other technical factors confirm this.  A question remains how long this will last and will the yield break below the support around 4.40%.  That’s just about where the 200 weekly moving average is at the moment.

Our ECONOMY and the MARKETs.

Our economy was even slower than initially reported in the first quarter.  Such things as investments in homes, shrinking inventories, and a large trade gap helped to hold back our growth.

Here are a few questions that we are left to ponder:

In this age of massive IT capability how does the Commerce Department miss and make an initial estimate that is 216% larger than the final revised estimate?

With this being the weakest year-over-year growth in four years to what degree will it influence the Fed in any rate decision moves?

One of the biggest upward revisions in the report was consumer spending. Isn’t this where we are waiting for the shoe to drop? Was that the last hoorah?

Exports fell the most in the last four years and imports (i.e. oil) rose 5.7%.  America needs something of great value to export.  Maybe if we had leadership to promote the creation of renewable alternative energy technology, the way that John F Kennedy did with our space program in the ‘60s we would have that export.  Certainly we could rely less on imported oil.

The rest of the story can be found here on CBS’ Marketwatch

Our ECONOMY and the MARKETs:

U.S. home prices dropped in the first quarter compared with last year by a margin of 1.4%. This is the first decline in a year-over-year basis since 1991 according to the S&P/Case-Shiller index released.

The national decline "is reaffirmation of the pullback in the U.S. residential real estate market," said Robert Shiller, chief economist for MacroMarkets LLC, and co-inventor of the index.

In the first quarter of 2006 home prices were rising at an 11.5% pace. For the past three quarters prices have been falling.

Interest rates have remained rather steady.

Home prices rose 10% in Seattle, were down 4.8% in Washington and down 3% in Tampa, FL.

Our ECONOMY and the MARKETs:

Last night the Federal Reserve added liquidity to the banking economy.  It added $4.5B (that's right, BILLION) by purchasing overnight repos.

Yes, we the consumer are still paying a prime rate of 8.25%.  Voting members say they are still concerned with inflation.  But the fed is goosing the economy by adding liquidity.  What's up, Mr Bernanke?  Is there something you're not telling us?

LIFE & PERSPECTIVE:

Most of us would like to help the environment and save energy.  And if we could save some money in the process, we would enthusiastically do so.  If you want to accumulate some extra money for a down payment or gather some cash to pay down your existing mortgage, read on.

Most people would like to help the environment and save money but believe doing so would require a lot of time and energy on their part.

While this might be the case in some instances, there are many quick and easy environmentally friendly steps you can take.  Here are 10 things that take less than a minute each that you can do to help the Earth -- while saving money at the same time.

1. Use half (0 seconds): Commercials for products such as washing detergent, shampoo, hair conditioner, toothpaste and cleaning supplies aim to make you believe that you need to use much more than you actually do.  The reason for this is simple: If you use more of the product, you will have to buy it again more quickly, meaning the company makes more money.

The truth is that you can probably use half the amount that you are currently using and still get the results that you want.  You might have to adjust a small bit up or down, but you will use much less than you have been.  That effectively cuts the price you pay for certain products in half, which equates to several hundred dollars in your pocket.  This also means fewer chemicals being released into the air and water supply, plus less packaging going into landfills.

Couldn’t we also use less sugar in our foods and fertilizer for our lawns.  And if we use less, the amount of energy used for transporting the product is reduced.

2. Switch from hot to cold (under 5 seconds): Simply switch the setting on your washing machine so that it will wash your clothes in a cold/cold cycle (both the wash and rinse are in cold water).  This simple turn of a knob will save you about $100 a year, since most energy -- and cost -- for each wash comes from heating the water.  Even in cold, your clothes should get plenty clean due to the improved qualities of washing detergents.

And if you have a water softener this fact becomes more important.  Soft water allows soap to create suds more easily, reduces energy consumption in the hot water heater and allows easier kitchen and bathroom cleanup because soap rinses right off.

3. Throw in a towel (15 seconds): Keep a big fluffy towel (the more absorbent, the better) somewhere convenient to the dryer.  When you are about to dry a load of laundry, throw the towel into the dryer with the wet clothes.  The towel will help absorb the water in the other clothes as the dryer tumbles, reducing the time needed to dry all the clothes by about 10%.  This means you can run your dryer 10% less and save 10% of the cost of drying your clothes.

With an electric dryer one of the biggest drains on energy usage is powering the coil.

4. Not so hot (5 seconds for gas water heaters): Most water heaters are preset at 140 degrees Fahrenheit or higher.  This is warmer than most people need.  You can adjust your water heater down to 130 degrees (while a lower temperature will still be warm enough in most cases, you don't want to go below 125 degrees, since this will help ensure that common bacteria don't survive in your water tank) and you should remain comfortable.  For each 10-degree reduction in water temperature, you'll save 3% to 5% on your energy bill.

5. Reset thermostat (10 seconds): The higher you set your thermostat in the summer, the less your air conditioner has to work (shoot for 78 degrees or higher).  For every degree you increase the temperature on your thermostat, you save approximately 3% to 4% on your cooling bill.  You should be able to keep your inside temperature 2 degrees higher without noticing much of a difference, and you might be able to set it even higher.

6. Turn off the water (5 seconds): Turning off the water while brushing your teeth and washing your hands is simply a matter of changing a habit.  The average bathroom faucet flows at a rate of 2 gallons per minute.  If you turn off the tap while brushing your teeth and washing your hands, you can save approximately four gallons of water each time.  If you brush your teeth in the morning and at bedtime and wash your hands a few times a day, you can save up to 20 gallons of water per day -- which equals 600 gallons a month.  For a family of four, this can save 2,400 gallons a month.

Water is fast becoming the next precious resource.

7. No idling (5 seconds): If you are waiting for someone while in the car, stuck in traffic or at a drive-through and it's going to take more than 45 seconds before you start moving, you will use less gas turning off the engine and restarting than letting the car idle.  It's also not necessary to let your car idle more than a minute in the morning -- even in cold weather -- as newer cars generally run fine even without warming them up.

8. Close vents (5 seconds for each vent): Close the cooling vents in all the rooms in your house where you don't spend much time.  There is no reason to cool these areas if nobody is there.  This will make it easier for your air conditioner to cool your home and save money.  The one exception to this is if you have a cooling sensor (thermostat) in a room you don't use often.  You'd want to leave this vent open so your air conditioner doesn't work harder.

9. Replace light bulbs (30 seconds per light bulb): Compact fluorescent light, or CFL, bulbs use approximately one-fourth the electricity of incandescent bulbs, while lasting as much as 10 times as long.  Each regular bulb replaced with a CFL bulb will save about $40 over the life of the bulb.  Be sure to check with your local utility company to see if they offer a rebate or discount on these energy-efficient light bulbs to save even more.

10. Turn off lights (5 seconds): This is an obvious one, but it's one that people often fail to do through carelessness.  Lighting can account for up to 30% of the electricity bill in a home.  All it takes is a flip of a switch to turn off a light in any room you are no longer going to be using.

Another item to turn off when you leave the room is the ceiling fan. The cooling sensation that it creates by moving air across your skin only works if you are there.

For anyone who believes that saving money and helping the environment is time-consuming, you can see that in well under 10 minutes you can make a significant impact on the Earth while placing money back into your pocket. Make the commitment to take the few seconds to do each of these tasks, and not only will you feel good about doing your part to reduce waste, but you will also be rewarded with more money in your bank account.

Doing any of these items can be just plain smart. Doing them all in a consistent manner will save you money, funds that can be used to advance your financial goals.

This article was written by Jeffrey Strain on TheStreet.com. The original is in black and MetFund’s comments are in blue.

LIFE & PERSPECTIVE:

The Western honey bee (Apis mellifera) consists of several subspecies or races.  Mellifera is Latin, and means honey-carrying.  Apis refers to the genus and hence we have the bee that carries honey.  It is the one we know here in the eastern United States.

A community of honey bees has been used by Aristotle, Plato, Virgil and Seneca, Erasmus and Shakespeare, and in Marx and Tolstoy as a model of human society.  Honey bees are known to communicate through many different chemicals, odors and actions.  These are perhaps analogous to our phone, internet, and TV.  They live in colonies (cities or developments if in the suburbs) where the workers will sting intruders deemed to be harmful to the hive (National Guard, police or military).  Alarmed bees release a pheromone (a woman’s scream or police siren) that stimulates this defense and attack response in other members of the colony.

One of the first things I think of when I envision a bee is a honey comb.  The honey is made from a mixture of nectar and sweet deposits from plants and trees where it is brought to the hive and modified and stored in the honeycomb.  Bees also create beeswax which is secreted from a series of glands on their abdomens.  Both of these bee products have been gathered by indigenous peoples for centuries.

Recently there has been a great deal of media attention given to the “disappearing act” that some of the honey bee colonies have been experiencing.  The U.S. has lost one-quarter of their colonies in the last few months or about five times their normal winter losses.  The east coast alone has reportedly lost 70% of its commercial bee colonies.  This is also happening in Europe and Brazil and has been named Colony Collapse Disorder (CCD).

Alarming?  You bet!  About one-third of our diet comes from insect-pollinated plants, and the honeybee is responsible for up to 80% of that or more.  The disorder has serious implications for agriculture since many crops are pollinated by bees.  "The economic worth of the honeybee is valued at more than $14.6 billion in the U.S.," said Professor Diana Cox-Foster, a professor of entomology at Penn State University, when she testified before congress, which is looking into the mystery.  “The bees are immuno-compromised, being stressed somehow."

"This is the biggest general threat to our food supply," said Kevin Hackett, the national program leader for USDA's bee and pollination program.

The top suspects are a parasite, an unknown virus, some kind of bacteria, pesticides, or a one-two combination of the top four, with one weakening the honeybee and the second killing it.

Some scientists are advancing the theory that radiation from mobile phones interferes with bees' navigation systems, preventing the famously home-loving species from finding their way back to their hives.  Research conducted at Landau University found that bees refuse to return to their hives when mobile phones are placed nearby.

If it is radiation from manmade devices wreaking havoc with bees we must ask ourselves this question: what’s more important to us, our phones or bee pollination (tasty blueberries)?  I, for one, will be turning off my mobile device unless I need to use it that moment.  I don’t won’t to miss out on the blueberries, apples, cherries and melons this year or any other.