December 2013 - Ence Homes

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Geralann Tabet
Production Manager
619 S. Bluff St. Tower 1, Ste 2012
St. George, UT 84770
Direct: 435.215.7342
Fax: 877.371.4777
Cell: 435.619.2452

For the week of December 16th, 2013 – Vol. 11, Issue 50

>> Market Update

QUOTE OF THE WEEK… “It is always wise to look ahead, but difficult to look further than you can see.” —Winston Churchill

INFO THAT HITS US WHERE WE LIVE… Keeping Sir Winston’s words in mind, let’s consider some prognostications coming out now about the real estate market in 2014. A national online listing site sees housing becoming a little less affordable and repeat buyers emerging as the market’s dominant players. The site’s chief economist explained, “repeat buyers will be able to offset the higher price of the home they buy with the higher price from the home they sell.” This expert also sees mortgage rates creeping up, although he feels that should make the mortgage process easier, as lenders shift resources from refinancings to purchase loans.

Freddie Mac’s chief economist revealed that “single family mortgage debt outstanding increased for the first time since 2008.” He further explained: “This is a positive sign, as it reflects that the pick-up in new purchase-money originations has offset loan paydowns and led to a net increase in principal outstanding.” The Mortgage Bankers Association chimed in with a report that purchase loan applications were up a seasonally adjusted 1% for the week ending December 6, compared to a week earlier.

BUSINESS TIP OF THE WEEK… Despite the popularity of videos and social media, e-newsletters remain very useful marketing tools. Use your Facebook page and website to get sign-ups by offering freebies containing useful information.

>> Review of Last Week

FED FEARS STALL SANTA… Anyone hoping for an end-of-the-year Santa Claus rally to begin early had those hopes dashed last week, as Wall Street investors sent stock prices down, fearing the Fed will start tapering its bond buying program at this week’s FOMC meeting. The Dow and S&P 500 sailed south for the second week in a row, and this time they were joined by the tech-heavy Nasdaq. There wasn’t a lot of economic news, so traders were free to obsess over the coming Fed meeting. Now, a growing number of investors and economists think the central bank will announce the beginning of tapering on Wednesday.

In addition to sending stock prices up, the extra money the Fed has been pouring into the economy was intended to stimulate it. So tapering would be a sign our central bankers have become more confident about the recovery. Evidence to support that confidence came last week in the form of a Retail Sales Report that came in UP 0.7% for November and UP 4.7% over a year ago. This was joined by Wholesale Inventories and Business Inventories registering larger than expected build-ups. Even the monthly Federal Deficit came in lower than expected, while Core PPI wholesale prices remained within the Fed’s target.

The week ended with the Dow down 1.7%, to 15755; the S&P 500 down 1.6%, to 1775; and the Nasdaq down 1.5%, to 4001.

Greater concerns that the Fed could announce tapering as early as this week’s meeting sent bond prices skidding down. The FNMA 3.5% bond we watch ended the week down .80, to $99.24. This might have pushed mortgage rates up, but national average mortgage rates actually dipped slightly for the week ending December 12 in Freddie Mac’s Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.

DID YOU KNOW?… Realtor.com reports that more than half of all page views of listings, nationwide, now occur through a mobile device, as opposed to a desktop computer.

>> This Week’s Forecast

MANUFACTURING AND HOUSING STARTS UP, INFLATION OK, BUT WILL THE FED START TO TAPER?… Manufacturing activity is forecast to continue expanding in December by both the New York Empire and Philadelphia Fed Indexes. We’ll finally have Housing Starts for September and October, as well as for November, with steady growth expected. The Consumer Price Index (CPI) is predicted to show inflation well within the Fed’s target range.

The big focus will be on the FOMC Meeting on Wednesday. With recent improvements in some economic data, the Fed could begin tapering its $85 billion dollar a month bond buying program.

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of Dec 16 – Dec 20

Date	Time (ET)	Release	For	Consensus	Prior	Impact
M Dec 16	08:30	New York Empire Manufacturing Index	Dec	5.0	–2.2	Moderate
M Dec 16	08:30	Productivity–Rev.	Q3	2.7%	1.9%	Moderate
M Dec 16	9:15	Industrial Production	Nov	0.4%	–0.1%	Moderate
M Dec 16	9:15	Capacity Utilization	Nov	78.4%	78.1%	Moderate
Tu Dec 17	08:30	Consumer Price Index (CPI)	Nov	0.1%	–0.1%	HIGH
Tu Dec 17	08:30	Core CPI	Nov	0.1%	0.1%	HIGH
W Dec 18	08:30	Housing Starts	Sep	915K	891K	Moderate
W Dec 18	08:30	Housing Starts	Oct	920K	NA	Moderate
W Dec 18	08:30	Housing Starts	Nov	950K	NA	Moderate
W Dec 18	08:30	Building Permits	Nov	983K	1034K	Moderate
W Dec 18	10:30	Crude Inventories	12/14	NA	–10.585M	Moderate
W Dec 18	14:00	FOMC Rate Decision	12/18	0%–0.25%	0%–0.25%	HIGH
Th Dec 19	08:30	Initial Unemployment Claims	12/14	333K	368K	Moderate
Th Dec 19	08:30	Continuing Unemployment Claims	12/7	2.760M	2.791M	Moderate
Th Dec 19	10:00	Existing Home Sales	Nov	5.00M	5.12M	Moderate
Th Dec 19	10:00	Philadelphia Fed Index	Dec	5.0	6.5	HIGH
Th Dec 19	10:00	Leading Economic Indicators (LEI) Index	Nov	0.6%	0.2%	Moderate
F Dec 20	08:30	GDP–3rd Est.	Q3	3.6%	3.6%	Moderate
F Dec 20	08:30	GDP Deflator–3rd Est.	Q3	2.0%	2.0%	Moderate

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… The debate has intensified over whether the Fed will begin tapering at this week’s meeting, but economists expect the Funds Rate to stay at its super low level well into next year. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

After FOMC meeting on:	Consensus
Dec 18	0%–0.25%
Jan 29	0%–0.25%
Mar 19	0%–0.25%

Probability of change from current policy:

After FOMC meeting on:	Consensus
Dec 18	<1%
Jan 29	<1%
Mar 19	<1%

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cid_1
pid_11937

Geralann Tabet
Production Manager
619 S. Bluff St. Tower 1, Ste 2012
St. George, UT 84770
Direct: 435.215.7342
Fax: 877.371.4777
Cell: 435.619.2452

For the week of December 9th, 2013 – Vol. 11, Issue 49

>> Market Update

QUOTE OF THE WEEK… “We don’t know who we are until we see what we can do.” —Martha Grimes, American writer

INFO THAT HITS US WHERE WE LIVE… Last week saw that the housing market can put up some pretty impressive New Home Sales numbers. Sales of new single-family homes shot up in October by 25.4% over September to a seasonally adjusted annual rate of 444,000. This put new home sales up 21.6% versus a year ago. One research firm pointed out that these numbers provide evidence that the edging up of mortgage rates has not seriously hurt the housing recovery.

These analysts noted that October New Home Sales are about equal to those recorded from January to June this year, in spite of the fact that average mortgage rates had drifted up a bit. In fact, the 12-month moving average for new home sales is now at its highest level since March 2009. Inventory is up 25.5% over a year ago, giving buyers more choice, but the faster sales pace dropped the months’ supply to 4.9. For the past 20 years, the average supply of new homes has been 5.7 months.

BUSINESS TIP OF THE WEEK… To improve your creativity and mental performance, a study has found that exercise helps. Writers like Henry David Thoreau, Henry James, and Thomas Mann apparently knew this. They all liked a brisk walk before starting work.

>> Review of Last Week

JOBS UP, STOCKS DOWN… A better than expected monthly Employment Report sparked a stock rally on Friday, but it wasn’t big enough to prevent the Dow and S&P 500 from ending down for the week, after eight weekly gains in a row. The good news jobs report featured 203,000 nonfarm payrolls added in November, plus a drop in the unemployment rate from 7.3% to 7.0%, and this one wasn’t driven by a decrease in the labor force participation rate. Investors were delighted to see that the labor market is improving, but not strongly enough to cause the Fed to start tapering its bond buying this month.

Earlier in the week, upbeat economic news had the opposite effect, raising tapering fears that sent stocks down. Better-than-expected data included: the November ISM Index of manufacturing, October New Home Sales, Michigan Consumer Sentiment, and lower-than-expected Initial Unemployment Claims. The GDP-2nd Estimate for Q3 surprised at 3.6%, but analysts cautioned that 1.68% of the uptick came from the change in inventories. The Fed Beige Book opined: “The economy continued to expand at a modest to moderate pace from early October through mid-November.” We’ll take that.

The week ended with the Dow down 0.4%, to 16020; the S&P 500 down less than a point, to 1805; and the Nasdaq up 0.1%, to 4063.

Fear that the Fed would soon start to taper its bond buying program sent bond prices south. The FNMA 3.5% bond we watch ended the week down .21, to $100.04. Freddie Mac’s Primary Mortgage Market Survey reported national average fixed mortgage rates increased for the week ending December 5. Reasons given were the better jobs and home sales numbers. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.

DID YOU KNOW?… Activities the Fed may engage in while tapering include reducing its asset purchases and adjusting the Funds rate. Tapering usually only happens when the Fed feels confident about the economy’s direction.

>> This Week’s Forecast

RETAIL SALES AND INVENTORIES INCH UP, WHOLESALE PRICES HOLD… The forecast says November Retail Sales will edge upward, showing consumers are still doing their part to help the economic recovery. Both overall retail sales and the number excluding volatile auto sales should continue north.

October Business Inventories are also predicted up. Lastly, we note that wholesale inflation (the prices businesses pay) should stay under control, as measured by the Producer Price Index (PPI).

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of Dec 9 – Dec 13

Date	Time (ET)	Release	For	Consensus	Prior	Impact
W Dec 11	10:30	Crude Inventories	12/7	NA	–5.585M	Moderate
W Dec 11	14:00	Federal Budget	Nov	NA	–$172.1B	Moderate
Th Dec 12	08:30	Initial Unemployment Claims	12/7	315K	298K	Moderate
Th Dec 12	08:30	Continuing Unemployment Claims	11/30	2.750M	2.744M	Moderate
Th Dec 12	08:30	Retail Sales	Nov	0.6%	0.4%	HIGH
Th Dec 12	08:30	Retail Sales ex-auto	Nov	0.3%	0.2%	HIGH
Th Dec 12	10:00	Business Inventories	Oct	0.3%	0.6%	Moderate
F Dec 13	08:30	Producer Price Index(PPI)	Nov	–0.1%	–0.2%	Moderate
F Dec 13	08:30	Core PPI	Nov	0.1%	0.2%	Moderate

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… No matter what the Fed does about tapering its asset purchases, experts say that the Funds Rate should remain at its super low level for quite some time. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%