The big news this week was Wells Fargo announcing that earnings a positive number for the 1st quarter of this year to the tune of 3 billion dollars. The was largely due to high mortgage origination volume and also some profit taking by the bank. The mortgage bonds improved big time this past quarter, and the lenders have dropped rates as a result. But at the same time they are taking fatter profit margins per deal because the demand for loans is so high, they can price in more profit per deal and still have more than enough business. Additionally, a major reason that earnings were higher for them this past quarter is due the change in “Mark to Market” accounting earlier this month. I think we will see a positive trend here with other banks major US Banks as a result of the change in Mark to Market accounting. The bank also went on to say that the Wachovia acquisition is exceeding expectations.
In other news, Initial Jobless Claims were reported at 654,000, still a bad number but better than expectations. The Bank of England left their benchmark interest rate steady at a record low of 0.5% today and said it will continue to buy government bonds in an attempt to keep the UK from falling into a deeper recession. This is more good news for the global financial system.
The market is closed today for Good Friday. We’ll be around this weekend. Gave a good one!
Tony Guaraldi
Mortgage Consultant
