MARTHA, MARTHA, MARTHA…The sentence has finally been passed down, and Ms. Martha Stewart will find her days of crafts and cooking on hold as she serves five months in Federal prison, followed by five months home detention. And speaking of cooking, Mortgage Bonds finally started sizzling last Friday when the Consumer Price Index (CPI) hit the wire. All last week, Traders had been bombarded with news that should have moved Bonds higher and helped home loan rates improve, but they just seemed to give all the bullish news a nod and a yawn. It now appears that they were afraid that Friday’s important CPI number would come in hotter than expected, and they were waiting to bust a move.

And bust a move they did…why? The CPI Report is a very strong measure of inflation in the economy. The numbers came in very tame, and more importantly, showed a clear downward trend. This report eased the ever-present tension over inflation, and Bond Traders finally woke up, jumped into action and cooked up a nice little rally on Friday. This helped home loan rates improve .125% on Friday alone.

The next course may bring more good news for home loan rates in the short term…read on for this weeks forecast.

BUT WAIT – BEFORE YOU DO, DON’T MISS A LIMITED CHANCE TO GET RETURNS OF 3000% ON YOUR DOLLAR BY INVESTING IN THIS LITTLE KNOWN STOCK RIGHT AWAY! …IS YOUR EMAIL INBOX ALL-TOO-FAMILIAR WITH LINES LIKE THESE? STOCK UP ON SOME GOOD ADVICE ON AVOIDING “STOCK SCAMS” THAT CAN FOOL EVEN THE SAVVY INVESTOR BY READING THIS WEEKS MORTGAGE MARKET VIEW.

With no economic news of note scheduled until Thursday’s Initial Jobless Claims, what will drive home loan rates this week? On a technical level, Mortgage Bonds are enjoying the ride higher after such a long streak of flat trading. And in the absence of any news to pressure them lower, they may just keep drifting on up to the next level of technical resistance at the 200-day Moving Average seen on the chart below, which could cause rates to improve about .125% this week.

But the wild card this week is our good friend Chairman Greenspan, as he offers his semi-annual testimony on monetary policy this Tuesday. While analysts don't expect Big Al to reveal any startling new information about the economy, the testimony will definitely be scrutinized closely for any hints as to the timing of future Fed Funds rate hikes. With all the recent news indicating that the immediate threat of inflation is diminishing, the next rate hike may be pushed later than the previously anticipated date of August 10th.

Bottom Line: Greenspan’s comments on Tuesday could be a market mover…but in the absence of any surprises, home loan rates will likely be stable to improving slightly this week.

YOU’VE GOT MAIL…and does it ever look exciting!

Somehow, you are the lucky recipient of an email that is giving you the inside track on how you can get in on a penny stock that is sure to provide incredible returns, 50 to 250% within 30 days, 3000% within only one year! You can even click to view the actual research reports that clearly lay out the incredible recent advancements made in global microchip data communicator source electrodes. Well…while you’re not sure exactly what that means, it sounds impressive, and you definitely know what a 3000% return means. You take a closer look.

Wait a minute…down at the bottom in fine print, a disclaimer flat out tells you that the person sending the email to you will benefit significantly if the “research report” helps spur on a frenzy of stock purchases for this company. Whoa, stop the press! Who would knowingly move forward and purchase a stock on this premise? Unfortunately, thousands and thousands of people are fooled every day, hoping that this might be it…their big chance to strike it rich, just like that neighbor’s brother’s friend’s cousin, who hit a gold mine on a penny tech stock just last month. Well, supposedly.

Millions of these stock scam emails go out on a daily basis. Is it legal, you ask? Unfortunately so. The companies touted in these “stock spam-scams” are real companies, who never asked for the promotion. And there’s nothing illegal about sending an email to a few million people telling them about a real company and what they do. And if even a microscopic percentage of people bite on the ploy and buy…mission accomplished. The stock price rockets higher as hopeful buyers get in as quick as they can, feeling justified because they can see the price is moving higher already. Whoever was behind the email watches the buying frenzy, and then quickly sells at a hefty profit. In short order, the stock price falls back to normal levels, as there was no reason for the stock to actually have moved higher in the first place. Optimistic buyers are left with a loss and a bitter taste in their mouth.

It seems so obvious, but savvy, educated professionals are being fooled. Yet there are many truly great stock newsletters and stock tips that are offered via email. So how can you tell the difference, protect yourself and be a wise investor? A few tips:

• First and foremost, it’s always best to work with a financial professional when making decisions of this nature. An expert financial advisor will be able to help you tell the difference between the real deal and a pipe dream.
• Always read the fine print on any offers or notices you receive via email. Find out who is behind the email, and check out their track record. One good source is Hulbert’s Financial Digest, which tracks and ranks stock tip newsletters.
• Investigate the company being promoted on your own, or ask a financial professional if they have any information on the specific company or industry that could help you make a wise buying decision.

Bottom line? Rely on good old-fashioned common sense. And just like Mom and Pop always said…if it seems too good to be true, it probably is.

The economic report calendar is super quiet once again this week, but always interesting housing numbers will be released on Tuesday. Also on Tuesday, Fed Chairman Alan Greenspan offers his semi-annual testimony on monetary policy. No breaking news on the economy is expected, but better believe that Bond Traders will be listening closely as to any hints on the timing of future rate hikes.

Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

For the week of July 19 – July 23, 2004