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In This Issue

Last Week in Review: There was more drama out of Europe, plus some important inflation news.

Forecast for the Week: Several important reports are ahead of the holiday weekend, with news on the housing market, durable goods, and consumer sentiment.

View: You’ve probably heard of phishing emails…but did you know you also need to keep a look out for "smishing" texts? See important details below.

Last Week in Review

It’s all Greek to me. And last week, news out of Europe dominated the headlines…impacting our markets and home loan rates. Read on for details.

Last week there was news that the European Central Bank (ECB) stopped providing funding to some Greek banks, adding to the drama in the region. ECB President Mario Draghi backed the move saying that the ECB will not compromise "the integrity of our balance sheet" to bail out Greek banks and the recapitalization effort must come from the Greek government themselves.

What will be made of Greece? Will there be a "Grexit," with the country exiting the Euro? What’s more, Spain looks like it will be in a recession throughout 2013 and that country is drowning in debt with Bond yields now approaching very lofty levels. When there is this much risk out in the market, Traders seek a safe haven like the US Dollar and US Bonds…and the drama and risk in Europe benefitted our Bonds (including Mortgage Bonds, to which home loan rates are tied) last week.

Here at home, inflation as measured by the Consumer Price Index (CPI) came in at 2.3% year-over-year. Remember, inflation hurts the value of fixed investments like Bonds (thus, hurting home loan rates)…so inflation staying in check is crucial when it comes to home loan rates remaining near record best levels. And while the year-over-year CPI reading was the lowest since February 2011, it’s important to realize that there is a negative correlation between inflation and what Treasuries are yielding…and this negative correlation can’t last forever. Investors will not continue to "lose" money to inflation by holding Treasuries. Either inflation has to moderate a lot OR the Bond Market has to adjust for inflation with prices moving lower. This will result in home loan rates moving higher.

The bottom line is that home loan rates remain near historic lows and now continues to be a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week

This week’s economic calendar is light, but there are still some important reports to watch:

• Existing Home Sales and New Home Sales will be released on Tuesday and Wednesday, respectively. The data comes after last week’s positive Housing Starts report.
• Weekly Initial Jobless Claims will be released on Thursday as usual.
• Also on Thursday we’ll see the Durable Goods Report for April. This report measures orders for big ticket items that last for an extended time.
• Consumer Sentiment rounds out the week and will be delivered on Friday.

In addition to those reports, the markets may be impacted by the upcoming holiday weekend. That’s because the week leading up to Memorial Day weekend usually sees low trading volumes – and by Friday afternoon, trading desks have pretty much cleared out. When volumes are low, markets can easily see some big swings.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on.

When you see these Bond prices moving higher, it means home loan rates are improving – and when they are moving lower, home loan rates are getting worse.

To go one step further – a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, the drama in Europe helped Bonds and home loan rates reach record best levels. I’ll be watching closely to see what happens this week.

The Mortgage Market Guide View…

Don’t Click That Link!

Beware of Smart Phone SMS Scams

Smart phones can make life – not to mention business – much easier. You can send and receive text messages in a flash to clients and colleagues. You can even text links to important web pages that can be opened right on a smart phone.

Of course, those same benefits make scams much easier for criminals. Take for instance the latest craze: smishing.

What Is Smishing?

Smishing uses SMS technology to deliver fake (and criminal) messages. In fact, the name actually comes from combining the acronym SMS with the word phishing (that is: SMs + phISHING = SMISHING).

How Does It Work?

It works much like a phishing email, except you receive it on your smart phone as a text message. It starts with a text message to your phone, often stating that you’ve won a prize or that your account requires some kind of update.

Two recent smishing scams consist of text messages that appear to be sent by Best Buy or Wal-Mart, stating that you’ve been randomly selected for a $1,000 gift card. The text message includes a link to a web page that looks professional and official. But it’s not. It’s really just a clever way for criminals to collect your personal data.

What Should You (NOT) Do?

If you receive any message that seems out of the ordinary or too good to be true, take the following precautions:

• Don’t open: If you didn’t register for a prize, you probably didn’t win one. So always be skeptical about emails or text messages that are unsolicited or offer free prizes that you didn’t register for yourself. If you see one that looks suspicious, don’t open it.

• Don’t click: If you do open the message before you realize it’s suspicious, don’t click the link.

• Don’t reply: Sometimes, people try to reply STOP in an effort to avoid receiving future text messages. But what they don’t realize is that there isn’t a list in most cases. Instead, criminals program their computers to randomly dial/text different phone number combinations. So, by replying to the message, you may actually be informing the criminals that you have an active number that received the message.

• Don’t call: Some smishing text messages will direct you to call a phone number rather than click a link. That may lower your guard, but the toll-free number is just part of the plan. Once you dial it, you’ll hear an automated voice that will collect your personal data for use by the criminals. If you do decide that you want to check if the message is real, don’t dial the number in the text or email. Instead, look the number up in the phone book or on a reputable site.

Here are just a few options that you should do if you receive a suspicious message:

• Delete: One of the best options is to simply delete the suspicious text or email.

• Report: You can also report the scam by filing a complaint on the FBI’s Internet crime website at http://www.ic3.gov.

• Stay up to date: You can stay up to date on the latest scams by following websites that track these issues. One option is the website ScamBook.com, which relies on user submissions to track everything from smishing to false advertising.

The bottom line is that no reputable company would text you to ask for your information. Keep your guard up and be suspicious of anything that seems odd or too good to be true. And remember to pass these tips on to your friends, family members and clients.

Economic Calendar for the Week of May 21 – May 25

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In This Issue

Last Week in Review: Bonds and home loan rates improved to record levels — find out why.

Forecast for the Week: A full slate of economic reports is ahead, with news on inflation, the housing market, manufacturing and more.

View: Did you know that bad news can be good for home loan rates? Be sure to read the article below.

Last Week in Review

Survey says? Last week’s economic report calendar may have been light, but some important surveys revealed key data to note. Read on for the details…and how home loan rates fared.

As you can see in the chart, the National Association of Realtors (NAR) said that of the 146 Metro cities surveyed, home prices rose in 74 of them in Q1 2012. This is up from 29 cities that saw an increase in home prices in Q4 2011. In addition, the NAR also said that inventories for existing homes fell 22% since this time last year and are down 41% since the peak in mid-2007. While the housing market has a long way to go, this report was a nice step in the right direction.

There was also news from the National Federation of Independent Business, which said that its small business optimism index gained 2% in April as the survey revealed that companies have increased plans for hiring and investing in the future. While companies added new employees at a slower pace in April than in March, the index rose to 94.5 — the highest level since February of 2011. Overall, though, the report showed that our economy is improving but is still fragile. The state of our economy is part of the reason for the improvement in Bonds (and home loan rates, which are tied to Mortgage Bonds) of late.

Another big reason that Bonds and home loan rates have been improving is the fresh round of uncertainty out of Europe. France elected a new president, and this change of the guard represents the ninth EuroZone leader swap since the financial crisis began. Greece is also back in the news and their citizens are not taking to the austerity measures either. The New Democracy government, a pro-bailout party, is having trouble gathering the support to rule the government. This has sparked some safe haven trading into our Bonds, as investors see our Bonds as a safe place for their money.

The bottom line is that now continues to be a great time to purchase or refinance a home, as home loan rates remain near historic lows. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week

With earnings season behind us, investors will be deluged with a slew of economic reports that will touch on many segments of the U.S. economy:

• Retail Sales will be released on Tuesday. This report gives the markets some insight to how consumer spending is holding up.
• Also on Tuesday, the Consumer Price Index (CPI) will report on inflation at the consumer level. Last week’s Producer Price Index showed that inflation at the wholesale level has moderated, thanks to lower energy prices. Will CPI follow suit?
• Manufacturing from the New York Empire and Philadelphia Fed Index will also be released Tuesday and Thursday, respectively.
• Housing Starts and Building Permits data will be delivered on Wednesday.
• Last — but not least — will be the Weekly Initial Jobless Claims numbers on Thursday. Last week’s data was the lowest in a month.

In addition to those reports, European headlines will continue to dominate the news as the debt woes in that region plague the global economies. Also, the minutes from the Fed’s April meeting of the Federal Open Market Committee will be released and this could move the markets.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on.

When you see these Bond prices moving higher, it means home loan rates are improving — and when they are moving lower, home loan rates are getting worse.

To go one step further — a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Bonds and home loan rates reached record best levels last week. I’ll be monitoring the markets closely this week to see what happens next.

The Mortgage Market Guide View…

Why Bad News Can Be Good for Home Loan Rates

It may seem odd that negative economic news can actually be good for home loan rates, but there’s a pretty simple explanation for this phenomenon. Here’s a concise explanation you can share with your clients or you can use to gain a better understanding yourself.

First, we need to remember that big money managers who are in search of higher returns avoid holding onto cash by investing in both Stocks and Bonds.

Second, we need to dispel the myth about how home loan rates are determined. Despite what it may sound like in news stories covering the Federal Reserve’s meeting, home loan rates are based on the performance of mortgage-backed securities — which are a type of Bond.

When we put those two points together, we see that whenever the economy is on fire and there are good economic news reports, investors tend to put more money into Stocks. That’s because Stocks offer higher returns, even though they are generally more risky. To put money into Stocks, however, investors must remove some of their money from less-risky Bonds. The result is a decreased demand in Bonds that causes Bond prices to worsen, which causes home loan rates to go higher.

Inversely, when the economy is sluggish and economic reports are negative, money managers tend to take money out of higher-risk Stocks to put it into less-risky Bonds. As demand for Bonds increase, Bond pricing improves and home loan rates go down.

So while it may seem odd that home loan rates improve when economic news is sluggish, it actually makes sense when you look at the big picture.

If you have any questions about how the economic news is impacting home loan rates, please just call or email. I’m always happy to chat about what’s happening in the markets and what it means to home loan rates.

Economic Calendar for the Week of May 14 – May 18

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In This Issue

Last Week in Review: The Jobs Report for April is in, but what did the news reveal about our economy?

Forecast for the Week: A quiet week is ahead, but an important inflation report will be released.

View: If you’ve ever forgotten the name of an important colleague or client, have no fear. These tips can help.

Last Week in Review

Take this job and love it. And the Labor Department’s Jobs Report for April showed that fewer than expected people are able to do this, as fewer than expected jobs were created. Read on for details and what they mean for home loan rates.

The Jobs Report showed that 115,000 jobs were created in April, with 130,000 private sector jobs offsetting government job losses. This number was a disappointment and below expectations. The only silver lining in the report were upward revisions to the previous month’s readings which added 53,000 more jobs than what was previously reported.

The unemployment rate dropped a tick to 8.1% — the lowest since January 2009. However, the decline was mainly due to the labor force shrinking by 300,000, rather than by robust job growth. And as expected, we are starting to hear more and more about the Labor Force Participation Rate (LFPR). The LFPR dropped to 63.6, the lowest ratio since December 1981. Why is this important? The LFPR gives us a clear read of who is working and who is not.  And if someone is not participating, then they are probably receiving some sort of social security or unemployment insurance. The bottom line is that it is tough to pay down debt when there are not enough people participating in the labor force.  

Overall the Jobs Report was underwhelming and, unfortunately, further accommodative monetary policy or even more Bond buying (known as Quantitative Easing or QE3) will have a very limited effect on job growth. What’s more, the debt drama in Europe continues to escalate, as both Italy and Germany reported higher than expected unemployment rates, while Spain has slipped into its second recession since the financial crisis.

The events in Europe and potential softening of our economy have resulted in home loan rates remaining near historic lows. That means now continues to be a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week

After two weeks featuring a slew of economic reports, this week’s calendar is light. But that doesn’t mean there won’t be a battle for investing dollars in the Stock and Bond markets!

• The first report won’t be released until Thursday with the weekly Initial Jobless Claims report. Last week, claims fell by 27,000, which was the largest weekly decline since May 2011.  
• On Friday, inflation at the wholesale level will be released in the form of the Producer Price Index (PPI). Last week it was reported that the year-over-year Core Personal Consumption Expenditures (PCE) rose to 2%, the high end of the Fed’s range.
• The last report on Friday will be the first reading on Consumer Sentiment for May.

With so few economic reports this week, market players will be focusing in on the ongoing debt crisis in Europe, earnings reports and how the $66 Billion in Treasury Notes and Bonds will be received. All three of those news items could move Bonds and home loan rates this week.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on. 

When you see these Bond prices moving higher, it means home loan rates are improving — and when they are moving lower, home loan rates are getting worse.

To go one step further — a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning. 

As you can see in the chart below, Bonds and home loan rates reached record best levels after last week’s Jobs Report. I’ll be monitoring the markets closely this week to see what happens next.

The Mortgage Market Guide View…

It Pays to Have a Good Memory

In today’s housing market, it can pay (quite literally) to have a good memory. That’s because a good memory can help you stand out from the competition — especially when you’re networking and trying to remember names.

Unfortunately, many of us have trouble remembering the name of someone two minutes after we shake her hand. If that sounds like you, don’t worry… you’re not alone. It’s actually an extremely common occurrence for many people. The good news is there are a number of simple, practical steps you can take to improve your memory now and long into the future. Here are just two of the great tips for proactively strengthening your memory.

Tip #1: Neurobic Exercise

You know all about the wonderful effects aerobic exercise has on the heart, but have you heard of neurobic exercise for the brain?

According to Lawrence Katz, co-author of Keep Your Brain Alive: 83 Neurobic Exercises, the best exercise for the brain is to force it to form "new patterns of association" or new pathways. In other words, challenge your brain every day. Take it off autopilot and make it relearn or create new associations with the most routine activities of your day.

Katz’s book offers numerous examples of small changes you can make to activate your brain, including: brushing your teeth with the other hand; taking an alternative route to work; moving your wastebasket to the other side of your desk; closing your eyes while putting your key in and unlocking the front door; and changing where you and your family members sit at the dinner table.

So if you feel like your memory might be starting to slip a bit, try some of these simple neurobic exercises today!

Tip #2: Mnemonic Drilling

There are actually three steps or stages of memorization: acquisition, consolidation, and retrieval. That means, once we acquire new information, like someone’s name for instance, the way in which we consolidate that data will directly affect how well we’re able to retrieve it from memory.

Whether you’re a visual or auditory type of learner, there are many mnemonic devices that can help you to better organize or consolidate the new information that you need to recall.

Here’s an example of simple steps that might help:

First, associate the data you want to remember with common images. For instance, let’s say you meet someone named Jennifer Green. Imagine Jennifer playing golf, or picture her wearing all green clothes, or imagine her face painted completely green.

Second, think of associations you can use to help you remember this person. For instance, link Jennifer to the quality that best fits her personality (use alliteration and rhymes whenever possible): Jolly Jennifer Green.

Finally, connect sound to your memory by saying the name aloud.

Do this regularly and, before you know it, you’ll never forget anyone’s name again! And that can give you a nice advantage in networking and communicating with clients!

Economic Calendar for the Week of May 07 – May 11

Your Mortgage Advocate

Wednesday, May 02, 2012

April ADP non-farm private jobs estimated at +186K yesterday, as reported at 8:15 jobs increased just 119K. Another huge miss by analysts and those that make those forecasts. The reaction is as you would expect, the 10 yr note rallying taking the interest rate to 1.90% at 9:00 this morning and mortgage prices +4/32 (.12 bp). Stock indexes, also as you would expect, down point to a weaker open at 9:30. According to ADP small businesses added 58K, medium size businesses +57K and large businesses -4K (small is 1 to 49 employees, medium 50 to 499K and large over than 499). Goods producing jobs declined 4K, services +123K , manufacturing -5K.

Prior to the ADP data the consensus estimates for Friday’s non-farm private jobs was +178K with a broad range as usual. Now what will estimates be for Friday’s BLS employment report? Over the previous six reports, ADP’s initial figure was closest to the Labor Department’s first estimate of private payrolls in October, when it overstated the gain in jobs by 6,000. The estimate was least accurate in December, when it overestimated the employment gain by 113,000.

The jobless rate in the 17-nation euro currency area increased to 10.9% in March from 10.8% in February, the European Union statistics office in Luxembourg said today. That’s the highest since April 1997. Separate reports showed euro-area manufacturing contracted more than initially estimated in April and unemployment in Germany, the region’s largest economy, unexpectedly increased. German unemployment unexpectedly rose in April as the debt crisis in the euro area constrained growth and hiring in Europe’s biggest economy. The number of people out of work increased a seasonally adjusted 19,000 to 2.87 million, the Federal Labor Agency in Nuremberg said today. The German jobless rate was unchanged at 6.8%, still a two-decade low, after the agency revised up figures for February and March.

Europe continues to drag the world down economically; the austerity plans jammed down the throats of countries with sovereign debt problems is back-firing in terms of economic health. Before it is over we expect huge push-backs from citizens as wages and jobs are falling like leaves in October. Germany continues to control the situation for now, protecting its wealth and not willing to allow itself to be dragged into the problem to deeply. Germany is the key to re-structuring what was said to be cast in stone a few months ago. It isn’t working though, and in the end the EU, ECB and IMF will have to re-think the debt issues otherwise Europe is headed to depression and likely riots in the streets across the region.

The MBA applications report. The Market Composite Index increased 0.1% on a seasonally adjusted basis from one week earlier. The Refinance Index decreased 0.7% from the previous week. The seasonally adjusted Purchase Index increased 2.9% from one week earlier. The refinance share of mortgage activity decreased to 72.6% of total applications from 73.4% the previous week. The government share of purchase applications remained steady at 37.0%. The government share of purchase applications over the last three weeks has been at the lowest level since 2009. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 4.05% from 4.04%, with points increasing to 0.44 from 0.40 (including the origination fee) for 80% loans. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 4.32% from 4.27%, with points decreasing to 0.38 from 0.44 (including the origination fee) for 80% loans. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.80%, the lowest rate in the history of the survey, from 3.81%, with points decreasing to 0.50 from 0.52 (including the origination fee) for 80% loans. The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.31%, the lowest rate in the history of the survey, from 3.32%, with points decreasing to 0.41 from 0.41 (including the origination fee) for 80% loans.

At 9:30 the DJIA opened -56, the US 10 yr at 1.91% and mortgage prices +5/32 (.15 bp).

At 10:00 March factory orders were expected to have declined 1.8% after increasing 1.3% in February. As released orders

The bellwether 10 yr still testing 1.90%, unable to break it so far. If the 10 does decline below 1.90% on strong volume, and is able to hold below for three days (something it has been unable to do since the recent rate declines that began last September), the next technical resistance is at 1.80%, then 1.70% the absolute low seen on Sept 23^rd.

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In This Issue

Last Week in Review: The Fed met, but was there mention of more Bond buying?

Forecast for the Week: A full slate of economic reports is ahead, with news on inflation, manufacturing, and the job market.

View: Cinco de Mayo is right around the corner. Use these great conversation pieces when talking with clients.

Last Week in Review

"I’m still standing – yeah, yeah, yeah." Elton John. And after last week’s Fed meeting, Bonds and home loan rates are still standing near record best levels. Read on for details.

After last week’s regularly scheduled meeting of the Federal Open Market Committee (FOMC), Fed Chairman Ben Bernanke acknowledged that conditions in our economy are improving modestly, but he noted that the housing market remains depressed. One example of this is New Home Sales, which fell 7.1% in March to 328K units on an annual rate.

Bernanke also noted that inflation is higher in the short-run due to higher energy costs, but that the Fed expects prices to moderate and remain in check longer-term. Remember, inflation hurts the value of fixed investments like Bonds (including Mortgage Bonds, to which home loan rates are tied)…so inflation staying in check is crucial when it comes to home loan rates remaining near record best levels.

One important subject the Fed didn’t mention in their Policy Statement was another round of Bond buying to stimulate our economy (known as Quantitative Easing or QE3). This wasn’t much of a surprise because — after several moves to prop up the economy — the Fed must see where upcoming economic reports go before venturing to underwrite the economy further. If the housing market remains depressed and the economy doesn’t pick up steam, QE3 could be a very real possibility.

And there was a bit of a sluggish read on our economy last Friday, after the Fed’s mid-week meeting. The advanced (first of three readings) of Gross Domestic Product (GDP) for the 1st Quarter of 2012 came in at 2.2%, well below expectations. This was also well below the 3% final 4th Quarter 2011 GDP reading. Within the report it showed that the personal consumption expenditure inflation reading rose at the fastest pace since the 2nd Quarter of 2011. This is definitely something the Fed is watching closely.

As 2012 continues to unfold, inflation, the housing market, our sluggish economy, and our ever-growing debt are important issues that the Fed and our government need to address. Seeing the debt crisis in Europe escalate must put a sense of urgency on our government to reign in our annual budget deficit and overall debt. This mix of factors will continue to impact the direction in which Bonds and home loan rates move in the weeks ahead.

The good news is that now continues to be a great time to purchase or refinance a home, as home loan rates remain near historic lows. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week

A slew of economic reports are set for release this week, and investors and traders will be watching the data closely for any signs of an economic slowdown:

• Right off the bat on Monday the Personal Income and Spending data will be released along with the closely watched Core Personal Consumption Expenditure (PCE) report. The Core PCE is the Fed’s favorite gauge of inflation and comes after Fed Chairman Ben Bernanke said last week that inflation in the short-term has been pressured higher by rising energy costs.      
• In the manufacturing sector, the Chicago PMI will be released on Monday with the national ISM Index delivered on Tuesday. 
• On Wednesday, the ADP Employment Report will be released ahead of the government’s monthly Non-farm Payrolls and the Unemployment Rate on Friday.         
• Initial Weekly Jobless Claims will be released on Thursday. The recent couple weeks of elevated Jobless Claims is disturbing…and if it continues, rest assured QE3 chatter will re-emerge.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on. 

When you see these Bond prices moving higher, it means home loan rates are improving — and when they are moving lower, home loan rates are getting worse.

To go one step further — a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning. 

As you can see in the chart below, Bonds and home loan rates continue to hover near record best levels. I’ll stay on top of this week’s news to monitor how Bonds and home loan rates are impacted.

The Mortgage Market Guide View…

Cinco de Mayo: The Story You May Not Know

In a few days, we’ll mark the celebration known as Cinco de Mayo. Although many people have heard of this celebration, most people don’t realize that the event being commemorated may have actually played an important role in shaping the United States that we know today.

Feel free to share the interesting facts below with clients and friends in the coming days! You may surprise them with what you’re about to read.

What Does Cinco de Mayo Commemorate?

Many people believe that Cinco de Mayo is the day that recognizes Mexico’s independence from Spain. To set the record straight, that conquest happened on September 15th, 1810. Cinco de Mayo, on the other hand, celebrates an event that took place over 50 years later.

On May 5, 1862, the Mexican cavalry, under the command of Texas-born General Zaragosa, defeated the French at the battle at Puebla, a city 100 miles east of Mexico City.

The French army, having not suffered a defeat in nearly 50 years, landed in the port of Vera Cruz and headed toward the capital city with a specific mission. Fearless of any opponent, the French sought to overthrow the capitol and gain control of Mexico, even bringing along a Hapsburg prince to oversee the would-be empire.

Cinco de Mayo’s Connection to the United States

The goal of France’s leader, Emperor Napoleon III, was to gain proximity to the US in hopes of supplying the Confederate Army in their fight against the North. He had a vested interest in sustaining the division within America.

To America’s benefit, the undersized Mexican cavalry used their knowledge of the terrain to defeat the powerful French army. This victory enabled the northern states to build the greatest army in the world at that time.

Fourteen months later, the North soundly defeated the Confederate Army in the battle at Gettysburg, thus ending the civil war. Union troops were subsequently rushed to the Texas/Mexican border to help expel the French from Mexico.

For this reason, Cinco de Mayo is celebrated in both countries. More importantly, it’s a great occasion to honor freedom and liberty.

Economic Calendar for the Week of April 30 – May 04