Morning Market Report

Cisco reported earnings after the bell yesterday and its CEO, John Chambers, was far too gloomy in his forecast. As such, not only is the stock down but the NASDAQ sector with it. The NASDAQ is off about a half percent, while the other two indices are up by a bit more than that. Meanwhile, Taylor Bean and Whitaker closed down yesterday. That may not be a familiar name but they were the third biggest FHA lender in the country. They have been characterized as buying a lot of the "junk" that other lenders won't buy. This is going to actually be a major disruption to the mortgage market. There's likely to have been as many as one hudred thousand loans in their pipeline. All of those are lost. Many will be looking for new banks. With a major player out, banks are likely to raise rates just slightly. That likely also means longer wait times for any borrower currently refinancing.

Meanwhile, it was just reported that Morgan Stanley Dean Witter has paid back all TARP funds AND the Treasury made 20%. Lastly, the weekly jobless claims just came out. New filings were down 550,000 last week dropping 38,000, more than expected. More importantly, this is the fifth week in a row that number is below 600,000, showing a consistently slight improvement.

U.S. Treasury bonds were shaken by a report yesterday that the Treasury would auction off $75 billion next week. The Ten Year had shaved about five basis points prior to the announcement and then gave it all back and a bit more. It was trading at 3.69% before the announcement and is now trading 3.76%. The yield spread between the two year and ten year also increased slightly to 2.52%. Meanwhile, the Central bank of England is engaging in a bit of quantitative easing of its own.

The Bank of England expanded its bond purchase program beyond its original limit in an effort to spur lending and fight a recession that’s deeper than previously anticipated.

Bond yields plunged after the nine-member Monetary Policy Committee, led by Governor Mervyn King, kept the key interest rate at 0.5 percent and said it will increase its purchase program to 175 billion pounds. Twenty-three of 44 economists in a Bloomberg News survey predicted an expansion of the plan, and the rest saw no further purchases.

This is on the heels of the Bank of Australia leaving their benchmark rate at 49 year lows of 3%. Incidentally, things aren't bad everywhere. Australia just announced monthly job gains of 32200 and their unemployment rate is now at 6.8%.

Oil is down slightly at the open but continues its upward trend currently at $71.60. Markets finished up generally in the Far East. The Hang Seng was up 1.92%, the Straits Time Index in Singapore is down .2%, and the NIKKEI in Japan was up 1.32%.

In Europe, markets were up across the board. The FTSE in London was up by 1.45%, the DAX in Germany was up 1.04% and the Spanish Index was up 1.02%. The Dollar looks stronger today as well up against most major currencies.