3 Tips for Increasing Intelligence

Webster's Dictionary defines intelligence as the ability to learn and understand, or to deal with new or trying situations. Simply put, it's the degree of one's mental sharpness.

It's easy to believe that your intelligence is set, meaning there's no way to "boost" your brainpower. However, many scientific studies have proven the exact opposite. A combination of lifestyle adjustments and mental exercises has been shown to not only increase intelligence, but also to improve general brain health and help prevent disorders associated with aging, such as Alzheimer's disease.

According to most neurologists, the key is to stay mentally active, despite your age. The following five tips will help boost your mental activity and increase your intelligence.

Get Some Sleep - An adequate amount of restful sleep is an important component of brain function. While scientists argue over its effect on memory and learning, restful sleep provides energy as well as the ability to focus. Both are vital factors in achieving mental stimulation. Some studies have also shown the reverse to be true. More mental stimulation during the day equals better sleep at night.

Increase Your Exercise - Exercise brings oxygen-rich blood to the brain, an important component to overall brain health. Exercise also regulates blood sugar levels. Some recent studies have shown a correlation between impaired glucose tolerance and an undersized hippocampus, the portion of the brain that controls the conversion of short-term memory into long-term. In addition, forms of exercise such as aerobics, dance, and martial arts all require memorization and are great for promoting mental stimulation. They also help to develop the rhythm and timing circuitry that runs through multiple regions of the brain.

Play Games - Crossword puzzles, Sudoku, certain board games, and card games are great for mental stimulation. Each of them will exercise various brain functions such as lexical recall (memory for words that name things), attention, memory, logic, and pattern recognition. They are accessible to almost everyone, and some only require one player. The key here is that as you advance in skill, you should seek out harder, more challenging versions.

This Week’s Market Commentary

Monday’s bond market has opened in negative territory due to early stock strength. The stock markets are kicking the week off well into positive ground, with the Dow up 131 points and the Nasdaq up 30 points. The bond market is currently down 16/32, which will likely push this morning’s mortgage rates higher by approximately .125 – .250 of a discount point over Friday’s morning pricing.

 

There is no relevant economic data scheduled for release today. The rest of the week brings us the release of four relevant reports for the bond market to watch in addition to two relatively important Treasury auctions and a Fed conference.

July’s New Home Sales data is the first report of the week, coming late tomorrow morning. This report is the least important release of the week. It will give us another indication of housing sector strength and mortgage credit demand, but only tracks approximately 15% of all home sales. It usually doesn’t have a major impact on bond prices or mortgage rates unless it varies greatly from forecasts. Current forecasts are calling for little change between June’s and July’s sales of newly constructed homes.

Overall, we will likely see the most activity in rates Wednesday, but Friday is also relatively important. Stronger than expected results in the economic reports and disappointing results in the Treasury sales will most likely lead to rates moving higher this week. Trading late last week hints that mortgage rates may have bottomed out for the time being. Accordingly, proceed cautiously if still floating an interest rate.

Volatility Rules the Markets

Standard and Poor's downgrade of the United States' credit rating from AAA to AA+ led to an especially volatile week, with the Dow Jones Industrial Average falling over 600 points and the S&P 500 Index experiencing its worst day since December 1, 2008-and that was just on Monday! The extreme volatility continued through the week, including Tuesday after the Fed released their Policy Statement, which was rather downbeat on the economy. In fact, Fed Chairman Ben Bernanke said, "Economic growth so far this year has been considerably slower than the Committee had expected."

So where does our economy go from here?

The incoming economic data will be under a microscope, as global markets try to decipher if the US (and the world) is slipping back into a recession, or just experiencing a slow patch. If economic reports here in the US show even modest strength and an improvement from the recent weak news, Stocks could retrace some lost ground, which would come at the expense of Bonds and home loan rates. We saw some of this happen late last week, after Initial Jobless Claims fell below 400,000 for the first time in weeks and Retail Sales for July had their biggest increase in four months.

That being said, the current and ongoing concerns out of Europe should continue to provide a safe haven bid into the US Bond market... and this will help Bonds and home loan rates. But as you can see, with so many if's, about the only thing we can be sure of is more volatility.

Wherever we go from here, the key takeaway is that RIGHT NOW, home loan rates remain near some of the best levels we've ever seen. If you've been thinking about buying or refinancing a home, contact your mortgage consultant to learn how you can take advantage of this situation.

The Downgrade and Home Loan Rates

Standard & Poor's (S&P) downgrade of the United States' credit rating from AAA to AA+ was historic-and Stocks have certainly been volatile since the downgrade.

But US Bonds and home loan rates haven't been crushed by the news. If you've heard questions about the downgrade and home loan rates, keep the following points in mind:

• Despite the downgrade, there are a number of factors that bode well for US Bonds and home loan rates.
• S&P is currently the only credit rating agency that has downgraded the United States.
• Both credit rating agencies Moody's and Fitch have maintained the United States' AAA rating.
• More importantly, the ongoing credit crisis in Greece and other parts of Europe means that US Bonds are still considered one of the safest places to invest.

QE3 may be coming after all.

In a dramatic turnabout, market participants now believe the Federal Reserve is more likely than not to resume purchasing assets during the next year in a third round of quantitative easing (QE), the August CNBC Fed Survey shows.

About 46 percent of the respondents said the Fed will resume QE, according to the results of the CNBC Fed survey.

"There is no doubt that over the last week the odds of seeing another round of asset purchases has risen significantly ," says Tom Porcelli, chief U.S. economist at RBC Capital Markets. "This doesn't mean we think it will have any more success than QE2. What this simply reflects is a Fed with few remaining options. "

Meanwhile, the 60 respondents--who include economists, stock and bond strategists and portfolio managers--disagree with the S&P decision to lower the U.S. credit rating from Triple-A to Double-A plus.

Fully 70 percent of market participants gave the U.S. the top Triple-A rating, a higher percentage than France and the UK, which are rated Triple-A.

After the Fed's promise this week to keep interest rates low until mid-2013, 46 percent of respondents said the Fed will resume QE, up from 19 percent in the July survey; 37 percent said the Fed will not do QE, compared with 68 percent in July.

Of those who believe the Fed will resume QE, the asset purchases are expected to average $628 billion, up from $377 billion in July.   Mike Deuker of Russell Investments predicts: "Look for the Fed to initiate QE3 if the 10-year Treasury yield lingers below 2.25 percent, which is a sign of Japan disease."

Three regional Fed presidents dissented from the decision to keep rates low, but market participants were in greater agreement with the Fed chairman.

The bottom line is that home loan rates remain near their historic best levels, but about the only thing that is certain in the markets right now is the volatility.   Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

This Week’s Market Commentary

This week brings us the release of four relevant economic reports in addition to another FOMC meeting and two relevant Treasury auctions. With all of the volatility in the markets of the past two weeks, it is difficult to say whether this will be an active week for mortgage rates. Under normal circumstances, it would be. But it is hard to label any week as active if comparing to the previous two.

 

The first economic data of the week is Employee Productivity and Costs data for the second quarter that will be released Tuesday morning. It will give us an indication of employee output per hour. High levels of productivity are believed to allow the economy to grow without fears of inflation. I don’t see this being a big mover of mortgage pricing, but since it is the only data of the day it may influence rates slightly during morning trading. Analysts are currently expecting to see a decline in productivity of 0.6% and a 2.2% jump in labor costs. A stronger than expected productivity reading and a smaller than expected increase in costs could help improve bonds, leading to lower mortgage rates Tuesday.

The FOMC meeting is a single-day event that will be held Tuesday and will adjourn at 2:15 PM ET. It is expected to yield no change to key interest rates. Usually, the post-meeting comments seem to have more of an influence on the markets than the rate adjustments themselves, or a lack of one in many cases. Look for the statement to lead to volatility during afternoon trading if it hints at what the Fed’s next move may be and when it will come. Market participants will be looking for any indication of a move to help boost economic activity. If the statement does not give us new information, mortgage rates will probably move little after its release.

There is no important economic data on the calendar for Wednesday. June’s Trade Balance report will be released early Thursday morning. It gives us the size of the U.S. trade deficit but is the week’s least important report and likely will have little impact on the bond market and mortgage rates. Analysts are expecting to see a $48.0 billion deficit, but it will take a wide variance to directly influence mortgage pricing.

Friday has the remaining two pieces of economic data, one of which is highly important to the markets and mortgage rates. July’s Retail Sales data is that report. This data is very important to the financial markets and mortgage rates because it helps us measure consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, any data related to it can cause a fair amount of movement in the markets. A smaller than expected increase would indicate that consumers are spending less than previously thought, potentially further slowing the economic recovery. This is good news for the bond market and mortgage rates as it eases inflation concerns and makes long-term securities such as mortgage-related bonds more attractive to investors. Current forecasts are calling for an increase of 0.5%.

The last report of the day will come from the University of Michigan, who will release their Index of Consumer Sentiment for August at 9:55 AM. This index gives us a measurement of consumer willingness to spend. If confidence is rising, then consumers are more apt to make large purchases. This helps fuel consumer spending and economic growth. By theory, a drop in confidence should boost bond prices, but this data is considered moderately important and carries much less significance than the Retail Sales report does. Analysts are expecting to see a reading of 62.5, which would be a decline from July’s revised reading.

Also worth noting are two important Treasury auctions this week. The sale of 10-year Notes will be held Wednesday while 30-year Bonds will be sold Thursday. We often see some weakness in bonds ahead of the sales as the firms participating prepare for them. However, as long as they are met with decent demand from investors, the firms usually buy them back. This tends to help recover any presale losses. But, if the sales are met with a lackluster interest from investors- particularly international buyers, the bond market may move lower after the results are posted and mortgage rates may move higher. Those results will be announced at 1:00 PM each sale day.

Overall, it is difficult to label one particular day as the most important. Friday’s sales data is the most important economic report, but Tuesday’s FOMC meeting has the potential to cause plenty of movement in the markets and mortgage pricing also. Tomorrow will also be interesting, especially considering the size of the sell-off in bonds Friday. I would not be surprised to see that negative tone extend into tomorrow’s bond trading and mortgage rates. I suspect the FOMC meeting will not have as much of an influence on mortgage rates as one may expect, but the markets can react wildly to a single word or omission of a word in the statement, so we need to be cautious. This is certainly another week that continuous contact with your mortgage professional is highly recommended if you are still floating an interest rate.

This Week’s Market Commentary

There are four relevant reports scheduled for release this week that are likely to affect mortgage pricing, but it may end up being news out of Washington that may have the biggest impact on the markets and mortgage rates. As of this evening, there appears to be much more progress being made on the debt ceiling issue than we have seen yet. There actually have been rumors of an agreement in general between the House and Senate, which could mean a finished deal by Tuesday’s default deadline is possible.

 

The stock markets took a beating last week, even before the surprisingly weak GDP reading Friday morning. The potential for a default on our debt and the credit downgrade that would have followed was expected to have a huge negative impact on our economy. That led to stock selling most of the week, and support in the bond market, although we did see softness in bonds at times also. The big day for bonds came Friday after the 2nd Quarter GDP reading fell well short of forecasts and a significant downward revision to the 1st Quarter reading fueled a sizable rally in bonds that gained momentum during afternoon trading. The yield on the benchmark 10-year Treasury Note fell below 3.80%, causing many lenders to revise rates even lower late Friday.

Friday’s rally caught us off guard a bit. That is one way of describing it. Another is to use the word unjustified. We certainly got bond-friendly news out of the GDP report, but I think we saw more flight-to-safety buying than long-term buying due to weak economic conditions. That is evident by the afternoon surge in bonds Friday that pushed yields below recent levels. The flight-to-safety is a bonus for mortgage shoppers closing in the very near future, but extremely problematic for borrowers that need a couple weeks or months before they go to closing. Time and time again (duplicate that many more times), we see gains from several trading sessions of flight-to-safety buying unwind in a single day of trading. In other words, rates can give back last week’s gains, and some, much quicker than they were able to capture them as soon as stocks appear ready to head higher. A resolution to the debt ceiling issue is definitely a strong enough event to do this. If the threat of a credit downgrade and default dissolves, I would not be surprised to see a couple hundred point gain in the Dow over a single, maybe two, trading sessions. That would likely cause most of the flight-to-safety funds to shift away from bonds and back into stocks. And a noticeable upward move in mortgage rates.

In addition to the debt ceiling topic, we do have a couple of extremely important economic reports for the markets to digest. The first important release is the Institute for Supply Management’s (ISM) manufacturing index for July late tomorrow morning. This index measures manufacturer sentiment by surveying trade executives about business conditions during the month and is considered to be of fairly high importance to the markets. A reading above 50.0 means that more surveyed executives felt that business improved last month than those who said it had worsened.

Wednesday morning brings us the release of June’s Factory Orders data at 10:00 AM ET. It helps us measure manufacturing sector strength by tracking orders for both durable and non-durable goods during the month of June. It is similar to last week’s Durable Goods Orders report that tracks orders for big-ticket items only. Since a significant portion of the data was released last week, this report likely will not have as big of an impact on the markets as last week’s did. Analysts are expecting to see a decline in new orders of approximately 1.0%. A larger than expected drop would be considered good news for bonds and mortgage pricing.

There is no relevant monthly or quarterly economic news scheduled for release Thursday, but Friday is a different story. The most important piece of data this week and arguably each month is the monthly Employment report. This report gives us the U.S. unemployment rate, number of jobs added or lost during the month and the average hourly earnings reading for July. The ideal situation for the bond market is rising unemployment, a sizable loss of jobs and little change in earnings.

While the preliminary reading to the GDP is arguably the single most important report in general, it is posted quarterly rather than monthly like the Employment report. Friday’s report is expected to show that the unemployment rate slipped 0.1% to 9.1% last month while approximately 78,000 jobs were added to the economy. The unemployment rate probably will not be much of a factor unless it moved much more than the 0.1% that is expected. However, due to the importance of these readings, we will most likely see quite a bit of volatility in the markets and mortgage pricing Friday morning if they vary from forecasts.

Overall, I am expecting to see another extremely active week for mortgage rates. I think that the most important day is tomorrow due to the debt ceiling crisis coming to a head and the ISM index being posted. Friday is also a key day with the monthly Employment report being released. We may see some pressure in bonds mid to late week ahead of Friday’s employment numbers (assuming Washington puts the debt ceiling issue to bed), but we also need to watch the stock markets for significant moves that can influence bond trading. We are getting key economic data during a period of great uncertainty about our economy with a major national crisis climaxing at the same time. If still floating an interest rate, I would definitely maintain constant contact with my mortgage professional. And hold on tight, it’s going to be quite an interesting week!