The Daily Dish - January 28, 2010

Let it snow, let it snow, let it snow. I’d never move away from Northeast Ohio, but if I did, I would miss never seeing snow. That said, one of the most defeating feelings is when your driveway is buried under snow and ice for weeks. You get a patch of 40-45 degree weather like we had last week. You finally start to see the concrete again! And one day, the driveway is gloriously clear. Then you wake up the next morning and it’s buried under snow again.

I’ve been slacking on my movie watching. I’ll blame football, the Cavs, the Wii, and a lack of good DVD releases these last few months. The latter all starts to change now, as many of the Golden Globe and expected Oscar nominated films start to come out. I’ll say this – I can’t wait to see “Up in the Air” … I’ve heard phenomenal things about it from all the people who’s opinions I trust. And I’ve loved the last two films from director Jason Reitman, “Juno” and “Thank You For Smoking”. Currently, I have a couple highly regarded foreign films at home as well as Tarantino’s latest. Next up in my Netflix queue are “The Hurt Locker” and a couple of the other award nominated films already out on DVD. Also season one of “Mad Men”. I’ve simply heard too many good things about that show and have decided to try and go back and start watching the old episodes.

In some Cleveland sports news, my good friend and TheClevelandFan.com writer Paul Cousineau is hosting All Bets Are Off on Sports time Ohio today from 3-6. It’s actually an all TheClevelandFan.com show, with several of our writers coming on as guests. And Kenny Lofton was inducted into the Indians Hall of Fame. Will Kenny make the Baseball Hall of Fame in Cooperstown? Hard to say. I’d say Kenny, Omar, and Thome all have good chances. Manny was a shoe-in before the steroids suspension. Fodder for future versions of The Dish …

Quote of the day …

“It takes 20 years to build a reputation and five minutes to ruin it.” If you think about that, you’ll do things differently.” ~ Warren Buffett

Market …

Let’s get right to it. All kinds of news today and all kinds of good linkage in the News section below.

Let’s start with the Fed. First off, in a surprise to no one, they agreed to keep it’s target interest rate near zero, and said the weak economy and subdued inflation “are likely to warrant exceptionally low levels” for interest rates “for an extended period.” That’s the same wording we’ve been seeing since the Fed lowered rates to these levels in December of 2008. But, in a change, the decision to keep that wording wasn’t unanimous. One member of the panel, Thomas Hoenig, “believed that economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted”.

The Fed also said it will follow through with plans to end a $1.25 trillion program to support the mortgage market by the end of March, and taper off other special lending programs by Feb 1. As we’ve mentioned several times before in The Dish, mortgage rates are a byproduct of what people will pay for mortgage backed securities (pools filled with individual mortgage loans, which are sold as investments). The biggest buyer, by far, is leaving the market in two months. Most people expect rates to rise as a result of this. Others feel it should have and would have happened already … and are today pointing to the fact that mortgages have hung in there on the heels of this announcement as evidence of that. We’ll see. I do think a steepening of the yield curve is likely as we head into spring. And if I’m a borrower on the fence, I am locking my rate today. That said, I wouldn’t rule out the Fed still having a trick or two up their sleeve. And would not rule out another little refinance boom with 30 year fixed rates in the 4’s at some point here in 2010.

State of the Union. Obama basically threw in the towel on his health care plan, moving a job creation plan to the forefront. He offered no specifics on his bank overhaul plan. He promised a freeze on government discretionary spending for three years, starting in 2011. He railed on partisan politics and lobbyists, blaming them for the failure to get health care reform done. And touched on some of the ways his economic stimulus plan has helped put some people back to work and get the economy growing once again.

End of the day, nothing really unexpected from either the Fed or Obama. Markets, as a result, haven’t really moved violently one way or another.

In other Fed news, Big Ben Bernanke’s confirmation vote is set to be held today in the Senate. He needs 60/100 yes votes to essentially seal another term for him, and he’s expected to get it … but barely. Did Big Ben make all the right moves when everything hit the fan 15 months ago? No. But he acted decisively, and in most cases smartly, to prevent a recession from turning into a depression, which would have been a disaster.

Lastly, on the economic news front this morning, the news wasn’t good. First time jobless claims were expected to fall to about 450,000 this week after last week’s unexpected rise. They really didn’t. They fell by just 8k to 470,000 … another big miss and sobering reminder on the brutal state of the employment market here in America. Also, durable goods orders (big ticket items ordered by businesses) rose far less than expected in December. A 2.0% rise was anticipated. Orders rose by just 0.3%.

The poor economic news has been somewhat mitigated by another wave of solid earnings reports. Ford, Colgate, Proctor & Gamble, and AT&T all bested earnings projections for the fourth quarter of 2009.

News …

~ Obama Pushes Jobs, Vows to Fight On

http://www.cnbc.com/id/35119144

~ Fed’s Greenlee: Bank’s Still Aren’t Making Loans

http://www.cnbc.com/id/35108640

~ US 2009 Foreclosures Go Beyond Sun Belt States

http://www.cnbc.com/id/35055884

~ Treasury Department Readies Changes to Mortgage Relief Plan

http://www.cleveland.com/business/index.ssf/2010/01/treasury_department_readies_ch.html

~ First-time Jobless Claims Fall By Just 8,000 to 470,000

http://www.bloomberg.com/apps/news?pid=20601087&sid=a4ScH2Imsa2c&pos=2

~ Durable Goods Orders Gain Less Than Forecast

http://www.bloomberg.com/apps/news?pid=20601087&sid=aoRCHnBEpQFA&pos=1