Archive for category: Recent News

For the week of May 20th, 2013 – Vol. 11, Issue 20

>> Market Update 

QUOTE OF THE WEEK… “Optimism is essential to achievement and it is also the foundation of courage and true progress.” –Nicholas Murray Butler, American diplomat and educator

INFO THAT HITS US WHERE WE LIVE… It definitely takes guts to remain optimistic in the face of some of the housing data coming at us these days. Last week, for example, we were greeted with a 16.5% drop in Housing Starts for April. It helps to dig into these reports. The dip was mostly due to multi-family starts, which are very volatile month to month, and were down 38.9%. Turns out, single-family starts were off just 2.1%. Taking a long-term view helps even more. Starts overall are up 13.1% versus a year ago, with single-family starts up a healthy 20.8%. So there.

It didn’t take any effort at all to stay optimistic in the face of the April Building Permits report. New building permits rose 14.3% during the month to a 1.02 million annual rate. Permits for single-family homes are now up 27.5% over a year ago, and multi-family permits are up a whopping 50.9%. An analysis of U.S. Department of Housing and Urban Development data revealed that 64% of building permits issued in the first quarter of this year were for single-family homes. And they were at the highest level since Q1 of 2008.

BUSINESS TIP OF THE WEEK… Use social media to give something back. Shining the light on others doing good in the community attracts attention to yourself in the best way possible. 

>> Review of Last Week

BULL-IEVE IT!… Given the week’s mostly disappointing economic data, it was hard to believe the bulls prevailed on Wall Street again, pushing stocks to their fourth weekly gain in a row with the Dow and the S&P 500 indexes setting new records. To be fair, the bulls did have some decent reports on which to base their enthusiasm. April Retail Sales, Building Permits, and Leading Economic Indicators all surprised to the upside. The Michigan Consumer Sentiment index for May also handily beat estimates.

However, a plethora of indicators headed to the downside, starting with weak readings for April Industrial Production and the New York Empire Manufacturing Index for May. The disappointing economic news continued with higher than expected Initial Unemployment Claims, a dip in Housing Starts, and a lower than expected Philadelphia Fed Index of manufacturing for that region. But the CPI reading for April showed that consumer price inflation is staying well under control.

The week ended with the Dow up 1.6%, to 15354; the S&P 500 up 2.1%, to 1667; and the Nasdaq up 1.8%, to 3499.

As equity markets hit new all-time highs, bonds came under considerable selling pressure and prices slid. The FNMA 3.5% bond we watch ended the week down .14, at $105.04. National average mortgage rates rose again in Freddie Mac’s weekly Primary Mortgage Market Survey, although they remain well below levels of a year ago. The Mortgage Bankers Association (MBA) reported purchase loan demand off for the week but still up 10% from a year ago.

DID YOU KNOW?… A bond is a debt instrument issued for a period of more than one year with the purpose of raising capital by borrowing. An investor who buys a bond becomes a creditor of the issuer but does not gain any ownership rights, as in the case of stocks. 

>> This Week’s Forecast 

HOME SALES GAIN, DURABLE GOODS RECOVER, FED CHITCHAT… Additional data on the housing recovery comes in this week and more progress is expected for April. Existing Home Sales are forecast to inch higher to just below a 5 million unit annual rate. New Home Sales should also continue edging up farther into 400K territory.

Wednesday’s FOMC Minutes from the Fed’s May 1 meeting will spark interest, as we see whether the discussion sheds any more light on the central bank’s view of the economy. The week ends with April Durable Goods, predicted to bounce back into positive territory, showing a healthier market for long-term purchases.

>> 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 May 20 – May 24

>> Federal Reserve Watch 

Forecasting Federal Reserve policy changes in coming months… Nothing happened last week to change the prevailing view of economists that the Fed will keep the Funds Rate at exceptionally low levels at least until the last three months of this 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%

Probability of change from current policy:

For the week of May 6th, 2013 – Vol. 11, Issue 18

>> Market Update 

QUOTE OF THE WEEK… “Great minds must be ready not only to take opportunities, but to make them.” –Charles Caleb Colton, English cleric and writer

INFO THAT HITS US WHERE WE LIVE… Both taking opportunities and making them have driven the housing market recovery to new accomplishments. For Q1 this year, existing home sales were at their highest level since Q4 of 2009 and new homes sales were the highest since Q3 of 2008. Last week, the National Association of Realtors (NAR) reported Pending Homes Sales were up 1.5% in March and up 7.0% compared to March a year ago. In fact, this measure of contracts signed on existing homes has now been above year-ago readings for 23 months in a row!

The NAR’s chief economist said, “Contract activity has been in a narrow range in recent months, not from a pause in demand but because of limited supply.” He added: “Job additions and rising household wealth will continue to support housing demand.” Finally, the 20-city composite of the S&P/Case-Shiller Home Price Index for February came in UP 9.3% versus a year ago. This was the highest annual growth rate since May 2006. In addition, all 20 cities showed price gains for at least two months in a row. That hasn’t happened since early 2005.

BUSINESS TIP OF THE WEEK… Start thinking of yourself as a brand. Then come up with a clear idea of where your brand stands and what sets it apart in the marketplace.

>> Review of Last Week

RECORD-BREAKING… Friday, new records were set for the Dow and S&P 500 stock indexes, as Wall Street went giddy over a better than expected (though still mediocre) April Employment Report. The Dow passed 15,000 during the day and ended at a record close just under that threshold. The S&P 500 nailed its record close just over 1600. The catalysts were a surprise gain of 165,000 nonfarm payrolls last month, an upwardly revised 138,000 jobs hike for March, and a drop in the unemployment rate to 7.5%, its lowest reading since December 2008. Better-than-expected Q1 corporate earnings also inspired investors.

Disappointing news did come with Personal Income, Q1 Productivity, ISM Manufacturing, and ISM Services all lower than forecast, though the manufacturing and services sectors of the economy are still showing growth. The Chicago PMI did have manufacturing contracting in that region. But Consumer Confidence and Pending Home Sales were both better than predicted, and PCE Prices, the Fed’s favorite measure of inflation, stayed well within the target range. Finally, weekly Initial Unemployment Claims fell to 324,000, their lowest level since January 2008.

The week ended with the Dow up 1.8%, to 14974; the S&P 500 up 2.0%, to 1614; and the Nasdaq up 3.0%, to 3379.

Over in the bond market, Treasuries gained following lower than expected Q1 GDP growth, then lost ground after Friday’s better jobs numbers. The FNMA 3.5% bond we watch ended the week down .12, at $106.04. National average mortgage rates slid for the fifth straight week in Freddie Mac’s weekly Primary Mortgage Market Survey. Their chief economist commented: “Near record low mortgage rates should further drive the housing market recovery over the near term.”

DID YOU KNOW?… The latest NAR survey reported the median days on market for all home sales was 62 days in March compared to 91 days a year ago, and 37% of respondents reported time on market at less than 1 month when sold.

>> This Week’s Forecast 

JOBLESS PROGRESS, A MONTHLY FEDERAL SURPLUS, A QUIET WEEK… Compared to the last few weeks, this one is quiet in terms of economic reports. Both Initial and Continuing Unemployment Claims are expected to show the slow but steady progress they’ve been delivering for a while.

The Federal Budget for April should again report a surplus. Lest we think Washington has mended its profligate spending ways, remember that April always features more tax revenue coming in, while, this year, sequestration is limiting revenues going out. For now.

>> 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 May 6 – May 10

>> Federal Reserve Watch 

Forecasting Federal Reserve policy changes in coming months… Last week’s policy statement said the Fed would keep the Funds Rate “exceptionally low…at least as long as the unemployment rate remains above 6.5%.” Economists do not expect to see that number any time soon. 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%

Probability of change from current policy:

For the week of April 22, 2013 – Vol. 11, Issue 16

QUOTE OF THE WEEK… “We do not have to become heroes overnight. Just a step at a time, meeting each thing that comes up,…discovering we have the strength to stare it down.” –Eleanor Roosevelt

Our hearts go out to the Boston bombing victims and their families. Our pride goes out to the heroes who responded with sacrifice and courage. God Bless America.

>> Market Update 

INFO THAT HITS US WHERE WE LIVE… Last week Housing Starts were reported UP 7.0% for March to a 1.036 million unit annual rate, 46.7% higher than a year ago and the highest they’ve been since 2008. But wait. The boost was all due to multi-family units, up 31.1% for the month. Single-family starts were down 4.8%, although they actually are UP a very healthy 28.7% from a year ago. Analysts tell us the multi-family sector is super volatile from month to month, but they expect large gains for home building overall for at least two years.

Building Permits in March were down a bit, to a 902,000 annual rate, but almost all the drop was due to multi-families. Single-family permits slipped just 0.5% for the month and are now UP 27.7% versus a year ago. The National Association of Home Builders (NAHB) confidence index went to 42 from 44 in March. But get this. The NAHB index for future single-family sales rose from 50 to 53, a very positive sign. Economists say it’s OK in a recovery to see up and down indicators along the way, as long as the underlying trend is upward, which it is now in housing.

BUSINESS TIP OF THE WEEK… Focus. Set goals, make decisions, get organized. Don’t just watch life happen; take control of your destiny. As Yogi Berra said: “If you don’t know where you are going, you’ll wind up somewhere else.” 

>> Review of Last Week

DOWN… It was a volatile week on Wall Street, with corporate earnings , economic data, commodities, and global growth worries keeping investors on edge. When all was said and done, it was no surprise that the three major stock indexes closed markedly down for the week. Q1 corporate earnings were a mixed bag, with IBM missing forecasts and Microsoft beating them. General Electric’s profits were in line with projections, but McDonald’s missed. Google happily reported a double-digit increase in net revenue from its core Internet business.

Economic data was also mixed. The New York Empire and Philadelphia Fed manufacturing indexes both missed estimates, indicating slowing activity in those regions. The NAHB Housing Market index and March Building Permits also came in lower than expected. But Industrial Production and Housing Starts both pushed past forecasts, clearly positive signs for factories and home builders. Yet crude oil and gold futures were hammered and global growth concerns returned, as China’s Q1 GDP rose at a 7.7% annual rate when 8.0% was expected.

The week ended with the Dow down 2.1%, to 14548; the S&P 500 also down 2.1%, to 1555; and the Nasdaq down 2.7%, to 3206.

Atypically, the heavy selling in stocks did not spur a flight to safety to bonds, which ended the week little changed. The FNMA 3.5% bond we watch ended the week up .01, at $106.09. After the prior week’s soft retail and consumer sentiment numbers, national average mortgage rates edged lower for the third week in a row. The Mortgage Bankers Association put purchase loan applications at their highest level since May 2010, up 4% for the week and up 20% versus a year ago.

DID YOU KNOW?… GDP, Gross Domestic Product, is the total value of all goods and services produced in a country in a year. It equals total consumer, investment, and government spending, plus the value of exports, minus the value of imports. 

>> This Week’s Forecast 

HOME SALES SOLID, DURABLE GOODS SINK, GDP SOARS… The week should begin with solid home sales numbers for March, the annual rate of Existing Home Sales surpassing the 5M threshold and New Home Sales moving ahead nicely. But as usual, any excitement will be tempered. In this case, Durable Goods Orders for March are expected to slide 3.1%.

In spite of this, the first Advanced Q1 GDP reading is forecast to show economic growth proceeding at an encouraging 2.8% annual rate. This is good news following the negative to anemic GDP growth numbers we saw for Q4.

>> 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 Apr 22 – Apr 26

>> Federal Reserve Watch 

Forecasting Federal Reserve policy changes in coming months… Last Thursday Minneapolis Fed president Narayana Kocherlakota said financial market conditions requiring the Fed to keep rates super low may persist for 5 to 10 years. More cause for economists to expect no change in the Funds Rate. 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%

Probability of change from current policy:

March 11, 2013 – Vol. 11, Issue 10

>> Market Update

>QUOTE OF THE WEEK… “If I had permitted my failures…to
discourage me, I cannot see any way in which I would ever have made
progress.”–Calvin Coolidge, 30th U.S. President

INFO THAT HITS US WHERE WE LIVE… Those of us who haven’t been
discouraged by the housing market these past few years, can now see the
progress we helped to achieve. Last week, more good
news came regarding home prices.

Aleading data aggregator reported national home prices were UP 9.7% in
January versus a year ago, the biggest annual increase since April 2006.
And the 0.7% monthly advance they posted was their 11th in a row. Many
observers feel these
price gains will likely boost home sales during the first half of the
year.

In addition, asking prices of homes listed for sale on a major online real estate portal were up compared
to a year ago in 90 of the top 100 U.S. metros. The asking price gains
for February were the largest since the recession began, UP 1.4% for
the month and UP 7% versus a year ago.
Their chief economist commented,
“…buyers face a dilemma between buying now before prices rise even more, or later this year,
when they’ll have more inventory to chose from.”

BUSINESS TIP OF THE WEEK…Think about what works well in your business, then focus on ways to improve
it. It’s easier to make changes to something that’s functioning well,
and making a good thing better can really pay off.
Review of Last Week.

SETTING RECORDS… Starting Tuesday, the Dow
set new record highs four days in a row, blasting past the peak it
reached in 2007, well before the recession. Even the broadly
based P 500 index ended the week just 14 points away from its all-time
record high. What made investors feel so optimistic were some decent
corporate earnings, better economic data, and the growing recognition that the
government spending cuts known as the sequester probably wouldn’t have
that much of an economic
impact once they started to kick in.

ISM Services bested expectations, at 56.0, showing solid expansion in the sector where over
80% of our jobs are found. Those jobs are now being created at a healthier pace, with 236,000 nonfarm payrolls added during February, enough to push the unemployment rate down to 7.7%, its lowest
level in four years. The release of the Fed’s Beige Book of economic observations from
around the country concluded that the U.S. economy is now expanding at a “modest
to moderate pace.”

The week ended with the Dow up 2.2%, to 14397; the
P 500 up 2.2%, to 1551; and the Nasdaq up 2.4%, to 3244.

The upbeat economic data that sent stocks skyward slammed bonds pretty hard. The
FNMA 3.5% bond we watch ended the week down .94, at $104.31. Freddie Mac’s Primary
Mortgage Market Survey had average fixed mortgage rates mostly holding
steady from the week prior. Their chief economist feels, “…these
low mortgage rates are helping to revive the housing market.” Underlining that
point, mortgage applications were up 14.8% over the week before,
according to the Mortgage Bankers
Association.

DID YOU KNOW?… Inflation is the
upward movement of prices, measured by gauges like the CPI and PPI. As prices rise,
the dollar’s value falls because it doesn’t buy as much. Inflation
has ranged from near zero to 23% the last 50 years, but the Fed’s goal
is 2%-3%.

This Week’s Forecast

CONSUMERS GAINING, BUT SO IS INFLATION…This week we check up on consumers
and forecasts show them increasing their contribution to the
recovery. February Retail Sales are expected up by a larger amount than January,
both with and without auto sales in the mix. Michigan Consumer
Sentiment is also predicted to continue its upward trajectory.
Remember, consumer spending makes up 70% of the economy.

But inflation appears to be gaining too. The PPI Producer Price Index, which measures what businesses pay for
things, is forecast up a bit much for February, although Core PPI is still OK. It’s the same story for the
prices we pay, a little high as measured by the CPI Consumer Price Index, but Core CPI, which excludes food and energy, remains within Fed guidelines.

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 Mar 11-Mar 15

Federal
Reserve Watch

Forecasting Federal Reserve
policy changes in coming months…With inflation within
Fed guidelines, according to the Fed’s favorite measures, the
Funds Rate should stay super low well into the future.

Note:In the lower chart, a 1% probability of change is a 99% certainty the rate will stay
the same.

Current Fed Funds Rate: -0.25%

Probability of change from current policy:

UIE