Durable Goods hit the tape this morning, falling 1.3% “headline” with the ex-transportation component up 2.0%.  The tale of tape is that airplanes and auto orders fell like a rock, signaling less demand for durable goods in the future.

Meanwhile, New Home Sales were unchanged in August, hovering at the lowest level since December 2003.  Stocks took the ex-transportation number (Plus 2.0%), coupled it with a statement by hedge fund manager Tepper that he is a “buyer” (stocks), and rallied out of the gate.  Bonds, notes, and mortgage backs ran for cover, falling 1 point in the 30 year bond.

Currently, the 10 year note is off 12/32’s with mortgage backs following suit, now down 8/32’s.  Overall, volume is light with money coming out of fixed income and being redeployed into stocks.  Mr. Tepper is said to be one of the top hedge fund managers on the street.  His returns, along with a number of hedge firms have been anemic this year (1.0% to 1.50%).  This is not a good way to keep your clients.  Not saying that he’s in buying stocks and trying to talk the market up but……….

Hard to see anything substantial in gains on the Dow/Naz until we put people back to work.  By the same token, it’s hard to see Austin mortgage interest rates move much higher given the many head winds the economy is faced with.

The next step for the market is to consolidate and find “value”, a level where buyers and sellers are neutral.  Given the longer term neutral/bullish bias, the most we should see the market sell off to is 125 03 in 10 year futures.  Austin mortgage borrowers are encouraged to take advantage of any rallies.  Too many cross currents leads to high levels of volatility.  Play it safe and take advantage of your opportunities!