Fixed-Rate Mortgages Steady, ARM Rates Fall

According to Freddie Mac's weekly survey, interest rates for fixed-rate mortgages held relatively steady for the second week in a row, while rates on adjustable-rate mortgages declined. The ARM rates showed downward movement amid market speculation that the Federal Reserve may cut rates again at its upcoming committee meeting scheduled on 29th and 30th of this month.

The 30-year fixed-rate mortgage averaged 5.88% during the week ending April 17, unchanged from last week's average. The mortgage averaged 6.17% a year ago.

Rates on 15-year fixed-rate mortgages, a popular choice for refinancing, averaged 5.40% for the week, down just slightly from last week's 5.42% average. The mortgage averaged 5.89% a year ago.

Five-year Treasury-indexed hybrid ARMs averaged 5.48% for the week, down from last week's 5.56%. It averaged 5.92% a year ago. One-year Treasury-indexed ARMs averaged 5.10%, down from last week's 5.18%. The ARM averaged 5.45% a year ago.

Google: The God is Not Immune to Worldly Matters

Google's (GOOG: Quote & Chart) first-quarter earnings report is due out on this Thursday. And many would try to find the answer to the question: Is this high-flying company faltering in the face of a recession?

2007 had been a great year for Google. The year brought a lot of cheer to those analysts who followed the company and, after each crossing of a century mark, issued another price upgrade by another $100 and were proved to be correct! Their attitudes smacked somewhat of the 'irrational exuberance' prevalent in the year 1999-2000 when all technology analysts were taking great joyrides on the back of some immature (and may be innocent but greedy) investors.

To these analysts Google was such a formidable God that the act of worshipping this God made them forget about other dangers of the world that this God, if properly asked about, could only show as results of its search engine but couldn't really control and thus indeed was vulnerable!

For example, on January 9th, Hillary Kramer, the stock-picker guest of the Nightly Business Report picked Google to be her choice of investment at that day's closing price of $653 (down from its 52-week high of $747 reached on November 7th), adding that she was hopeful the stock would soon surpass $800! And last Friday's closing price was $457.45! In the meantime it also passed through the 52-week low of $412 on March 17th.

Google is a great company. As far as search engine is concerned, Google still rules the world and our mind. But, as an investor, we need to shake off our emotion and stand aside and have a closer look and ask some questions: How many new products that the company launched have gone on to generate significant revenue? How many companies that Google bought (with rather high price tags) are going to significantly contribute to its coffer in near future? Can the company make money from ads while consumers continue to suffer from high prices of food and fuel and thus hesitate to spend?

The answers to these questions (if you try to search using Google) do not look rosy, if not gloomy. While nobody can doubt the long term prospect of the company, it seems lot of dust needs to be settled before the company can boldly cross the $500 mark again and this state of uncertainly should continue for quite some time irrespective of the outcome of Thursday's earning report.

Short and Long Gold

Gold had a great run over the last 3 years. Today's asking price is $904.80 an aounce. That is about 112% gain from the level of $426.9 on May 11, 2005 when we advised our readers to accumulate Gold. Consequently, the immensely popular Exchange Traded Fund (ETF), StreetTracks Gold Shares (GLD) , that holds actual gold bars, had made all its buy-and-hold investors happy.

However, a fear of downturn is gripping the mind of gold investors. The ETF, GLD lost about 11% from the peak it achieved on March 17th following the Federal Reserve's rate cut and inflation warnings.

As a result, ETFs that short future prices have started gaining value in the midst of all these. In late February, Deutsche Bank listed a trio of gold ETNs, which are similar to exchange-traded funds or ETFs, on the NYSE Arca. The following two are for shorting Gold:
o DB Gold Short ETN (DGZ) which provides investors the monthly inverse performance of gold, plus the bond collateral return.
o Deutsche Bank Gold Double Short ETN (DZZ) doubles down on futures prices and thus gains twice as the price falls.

But if you still strongly believe in the future run of Gold, Deutsche Bank also has another ETN for you in their Gold basket. The "double long" note, DB Gold Double Long ETN (DGP) is designed to give two times the monthly return of gold. But, remember, if the Gold price falls, it would hurt you twice as much.

All three ETNS have annual expenses of 0.75%.