Farrell: The Worries Are Abating

USA Today (which has a great sports section, by the way) reported the other day that mass transit ridership is up a lot. The American Public Transportation Association -- there really is such a thing -- shows that trips on public transit rose 3% in the first quarter, and that was before the recent big spike in oil prices. That's the good news. The bad news is that only 5% of workers have access to public transportation. Of people who drive to work, 73% do so alone; huge energy savings could be achieved there. But every little bit helps, and it looks like mass transit is becoming more popular.

I mentioned recently that there is a growing thought that the next move by the Fed will be to raise rates. The long-term mortgage market is sniffing this out. Rates on traditional 30-year fixed-rate mortgages rose last week to an average of 6.02% from 5.81%, according to Bankrate.com. HSH Associates in New Jersey says the average rate on 30-year fixed eligible for sale to Fannie Mae (FNM Quote - Cramer on FNM - Stock Picks) or Freddie Mac (FRE Quote - Cramer on FRE - Stock Picks) was 6.17%. Either way, rates are up a bit on mortgages -- while still very reasonable, they are up.

For what it's worth, I don't think that the markets' belief that the Fed might raise rates is due to a resurgence in inflation fears, but rather a sense that some measure of growth will be restored. As I have said many times, inflation is a lagging indicator, and I think the commodities markets will settle down, inflationary fears will recede a bit and some growth will take place. There is little chance of an inflationary problem of size without a wage and price spiral. There is no sign of that; indeed, we are all worried about the lack of job growth. I think the financial crisis is abating and that commodities, especially oil, will correct the recent frenzy. ISI Research believes the Fed won't do anything until after the rebates so it can get a sense of what the economy looks like. My guess is a lot of the rebate checks will go into gas tanks, but at least they are timely.

A total of $132.8 billion in bonds were sold in May. That's the most ever raised in a single month -- quite a feat when you consider what the environment was a few short weeks ago. The fact that bonds could be floated is an encouraging sign the credit crisis is calming. Single A-rated companies are paying around 6%, up a bit from this time last year, but only by about 25 basis points. Good news.

Lenders and investors owned about 660,000 foreclosed homes in April (in total), up from 493,000 in January, says The Wall Street Journal. That's bad, but during the worst of the depression in 1933, 1,000 homes a day were foreclosed with a much smaller population base.