Archive for category: Recent News

Feb 11, 2013 – Vol. 12, Issue 6

>> Market Update

QUOTE OF THE WEEK… “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel”–Maya Angelou, American author and poet

INFO THAT HITS US WHERE WE LIVE… People who are putting their homes on the market appear to be feeling pretty good these days. An online real estate portal reports that the asking prices of homes listed with them were up 5.9% in January from a year ago, in 86 of the 100 largest metros. Those asking prices grew by a seasonally adjusted 0.9% from December, the largest month-over-month boost since March last year.

Housing experts are feeling pretty good too. The chairman of the S&P Dow Jones index committee said, “housing is clearly recovering,” citing November’s healthy new and existing homes sales. The National Association of Realtors chief economist predicted, “Job creation and household formation will likely fuel growth. Both sales and prices will again be higher in 2013.” (CORRECTION: A keen Inside Lending reader pointed out Ayn Rand’s first name was misspelled following her quote in last week’s edition. We’re sorry for the typo and apologize to Rand fans.)

BUSINESS TIP OF THE WEEK… Don’t get sidetracked before you reach your goal. When you’re stuck, going out for a walk is a great way to clear your mind and get back on track.
>> Review of Last Week

ONE DOWN, TWO UP… The Dow had a seesaw 5 days–down 130, up 99, up 7, down 42, up 49–to end the week down a mere 0.1%, just below last week’s 14,000 threshold. But the S&P 500 headed north and is now up for the first six weeks of the new year, which has not happened since 1971! The Nasdaq also registered a gain, making another healthy start to the year. Friday, investors were buoyed as the U.S. trade deficit came in down almost 21% in December, its biggest drop in four years, thanks to rising exports and a decline in imports.

Earlier in the week, the ISM Services index was down for January but showed expansion for the 37th month in a row. Best of all, the ISM Services employment sub-index rose again, hitting its best reading since February 2006. Employment expansion is especially good for the economy in the services sector, since it provides well over 80% of U.S. jobs. On the down side, Productivity fell at a 2% annual rate in Q4, not too cool. But new weekly jobless claims were down by 5,000, to 366,000, another sign of labor market improvement.

The week ended with the Dow down 0.1%, to 13993; the S&P 500 UP 0.3%, to 1518; and the Nasdaq UP 0.5%, to 3194.

The light amount of economic data with its mixed messages kept buying steady in the bond market, Treasuries posting their first weekly gain in the last three. The FNMA 3.5% bond we watch ended the week up .01, at $105.13. National average mortgage rates, after edging up recently, settled back down in Freddie Mac’s Weekly Survey. Not surprisingly, weekly demand for purchase loans was UP 16% from a year ago, to its highest level since May 2010, according to the Mortgage Bankers Association.

DID YOU KNOW?… January was the first time since last spring that asking rents showed a smaller year-over-year increase (up 4.1%), than asking home prices (up 5.9%).
>> This Week’s Forecast

RETAIL, MANUFACTURING, CONSUMER MINDSET… January Retail Sales should be up a tick both overall and when you exclude auto sales. The New York Empire Manufacturing Index of activity in that region is forecast flat, no longer in negative territory.

Friday we’ll also see a bigger take on the factory sector, with Industrial Production predicted up a tad for January, plus the Michigan Consumer Sentiment reading, expected to be off slightly for February.
>> 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 Feb 11 – Feb 15

>> Federal
Reserve Watch   

Forecasting Federal Reserve
policy changes in coming months… If there are any economists
who think the Fed will raise the Funds Rate soon, they are
keeping very quiet about it. 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:

UIE

Jan 28, 2013 – Vol. 12, Issue 4

>> Market Update

QUOTE OF THE WEEK… “There’s no one to stop you but yourself.”–Dave Thomas, founder of Wendy’s and philanthropist

INFO THAT HITS US WHERE WE LIVE… There’s not much that’s stopping the housing market from steadily moving forward. For 2012, the National Association of Realtors reported existing home sales UP 9.2% to 4.65 million units, flirting with levels not seen since 2007’s 5.03 million homes. The median existing home price is UP 11.5% from December a year ago, the tenth month in a row of year-over-year gains. For 2012, the median price was UP 6.3%, the largest annual price gain since 2005! Completing the picture, although down in December, New Home Sales posted a 19.9% annual gain, their first  in 7 years. The median sales price for 2012 was UP 7.2% over 2011, while the FHFA index of prices for homes financed with conforming mortgages is UP 5.6% in the past year.

INFO THAT HITS US WHERE WE LIVE… There’s not much that’s stopping the housing market from steadily moving forward. For 2012, the National Association of Realtors reported existing home sales UP 9.2% to 4.65 million units, flirting with levels not seen since 2007’s 5.03 million homes. The median existing home price is UP 11.5% from December a year ago, the tenth month in a row of year-over-year gains. For 2012, the median price was UP 6.3%, the largest annual price gain since 2005! Completing the picture, although down in December, New Home Sales posted a 19.9% annual gain, their first in 7 years. The median sales price for 2012 was UP 7.2% over 2011, while the FHFA index of prices for homes financed with conforming mortgages is UP 5.6% in the past year.

CORRECTION: Last week’s coverage of homeowner tax benefits from the “fiscal cliff” agreement should have read: “Mortgage principal reductions or cancellations by lenders will NOT be treated as ordinary income to homeowners.” This tax break, which had been scheduled to expire 12/31/12, is good news for those receiving principal balance reductions from loan modifications, short sales, deeds-in-lieu, or foreclosures. NOTE: Always consult a tax professional for the definitive answer to any tax question.

BUSINESS TIP OF THE WEEK… Life rewards action. Instead of worrying about that big hill you’re climbing, commit to one small step you can take today and focus on that. Call a former client, work on your weekly blog post, or just get yourself clear on the next action to take.
>> Review of Last Week

WALL STREET WINNING STREAK… The broadly-based Standard & Poor’s 500 stock price index had been up eight days in a row as of Friday, its longest winning streak since November 2004. Even better, the S&P 500 closed for the week above the 1500 threshold for the first time since December 2007, before the recession began. The week’s upward impetus was provided by generally upbeat Q4 corporate earnings, the big exception being Apple’s disappointing report. Folks were also happy to see German business confidence up more than expected, a sign that Europe’s biggest economy is on the mend.

There were precious few economic reports to dampen the enthusiasm, although the ones we saw carried the usual mixed messages. The Richmond Fed index of mid-Atlantic manufacturing showed contraction. Housing numbers are covered above. New unemployment claims dropped to 330,000, their lowest level in 5 years, while continuing claims fell to 3.16 million.

The week ended with the Dow UP 1.8%, to 13896; the S&P 500 UP 1.1%, to 1503; and the Nasdaq UP 0.5%, to 3150.

The light week of economic data and the move by investors into risk assets led to selling in the bond market, sending prices southward. The FNMA 3.5% bond we watch ended the week down .83, at $105.18. National average fixed mortgage rates inched up, but still stayed near historical lows in Freddie Mac’s Weekly Survey. Purchase loan applications surged, according to the Mortgage Bankers Association, UP 26% versus the same time a year ago.

DID YOU KNOW?… A survey by the National Association of Home Builders (NAHB) put builder confidence at the highest level since April 2006.
>> This Week’s Forecast

PENDING HOME SALES, THE FED, GDP, INFLATION, MANUFACTURING, JOBS… This week tells us about lots of things economic, but the forecasts are mixed. December Pending Home Sales should be down a bit and Wednesday’s FOMC Rate Decision is expected to be unchanged, but the Fed’s policy statement will be scrutinized for its economic prognostications. Earlier that day, we’ll see an actual economic reading. Unfortunately, Q4 Advanced GDP is predicted to come in at a measly 1% annual growth rate.

Inflation is forecast to stay in check, as measured by Core PCE Prices, while the ISM Index of manufacturing should come in just over 50, showing expansion. The week concludes with its final biggie, Friday’s December Employment Report. A gain of 180,000 new payrolls is predicted, enough to drop the Unemployment Rate a tenth of a percent.
>> 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 Jan 28 – Feb 1

>> Federal
Reserve Watch   

Forecasting Federal Reserve
policy changes in coming months… The Fed is expected to
continue
to keep the Funds Rate at its super low level at this week’s FOMC
Meeting. 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:

UIE

Dec 17, 2012 – Vol. 10, Issue 51

>> Market Update

QUOTE OF THE WEEK… “Our greatest glory is not in never falling, but in rising every time we fall.”–Confucius

QUOTE OF THE WEEK… “Every path hath a puddle.”–George Herbert, Welsh-British poet, orator, and priest

INFO THAT HITS US WHERE WE LIVE… Last week, the path to recovery in the housing market required us to step over the puddle of a 3% dip in Housing Starts for November. Yet that path has also taken us to an annual rate of 861,000 units, putting overall starts UP 21.6% versus a year ago, and single family starts UP 22.8%.New Building Permits were UP 3.6% in November, so no puddles in that path where single-family permits are UP 25.3% over a year ago. No wonder the NAHB homebuilder confidence index gained for the eighth month in a row.

Data over on the existing home front was even rosier. Existing Home Sales went UP 5.9% in November, crossing the 5 million unit threshold, at 5.04 million homes.Those sales are UP 14.5% from a year ago. The median price is UP 10.1% in November, going to $180,600, as the months’ supply of existing homes plummeted to 4.8 months. The FHFA index of prices for homes financed by conforming loans gained 0.5% in October, UP 5.6% versus a year ago.

BUSINESS TIP OF THE WEEK… If you’re persuasive about your product or service, clearly explaining its advantages and benefits, then you don’t really have to “sell.”

>> Review of Last Week

CLIFF WALKING… Investors basically fixated on Washington’s fiscal cliff negotiations. The week began optimistically, and stocks followed suit, heading upward dramatically. But later in the week, a resolution to the tax and spending issues looked less certain, and stock prices faded. Congress then went into recess for the holiday, but planned to return this Thursday if there’s a deal of some sort to consider. Nonetheless, all three stock market indexes posted gains for the week.

Investors were encouraged when Q3 GDP was revised up to 3.1% annual growth from the prior 2.7% estimate. The Philadelphia Fed Manufacturing Index reported expansion in December, although the New York Empire Manufacturing Index indicated contraction. Personal Income was up in November and Core PCE Prices, excluding volatile food and energy, showed inflation up only 1.5% for the year.Unfortunately, Michigan Consumer Sentiment dropped to its lowest level since January. Too much fiscal cliff reporting, no doubt.

For the week, the Dow ended up 0.4%, to 13191; the S&P 500 was up 1.2%, to 1430; and the Nasdaq was up 1.7%, to 3021.

Activity in the bond market was held in check by the continuing political back-and-forth over how to stop the economy from going of over a fiscal cliff. The FNMA 3.5% bond we watch ended the week down .09, at $106.14. National average mortgage rates were again at or near historic lows in Freddie Mac’s weekly Primary Mortgage Market Survey. The Mortgage Bankers Association reported demand for purchase loans fell slightly for the week, but are UP 9% versus a year ago

DID YOU KNOW?… “Market capitalization” refers to the total value of a company’s stock, obtained by multiplying the number of shares outstanding by the current price per share. A company with 15 million shares at $20 has a market cap of $300 million.

>> This Week’s Forecast

NEW HOME SALES, PENDING HOME SALES, CONSUMERS, FACTORIES… A short week features some nice holiday presents if you like receiving economic data. November New Home Sales look to be inching up to a 379,000 annual rate. Pending Home Salesare forecast up, but less than the prior month. December Consumer Confidence is expected down from last month’s reading, but the Chicago PMI Index of Midwest manufacturing should be up a bit, showing growth.

Today, stock markets close at 1 PM ET, the U.S. Treasury market closes at 2 PM ET, and all are closed tomorrow, in observance of Christmas. Happy Holidays to all!

>> 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 24 – Dec 28

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… The Fed announced at their last meeting they’d keep the Funds Rate super low until unemployment drops to 6.5%, but no one expects that to happen 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:

UIE

Dec 3, 2012 – Vol. 10, Issue 49

>> Market Update

QUOTE OF THE WEEK… “We acquire the strength we have overcome.”–Ralph Waldo Emerson, American writer

INFO THAT HITS US WHERE WE LIVE… We who toil in the housing market must surely be very strong by now, having overcome some powerful forces, not the least of which has been the downward pressure on home prices. The latest evidence that pressure is letting up came with the Case-Shiller home price index, UP 0.4% for September and UP 3% versus a year ago. Nineteen of 20 metros reported higher prices not just for the month, but for the past three months! The FHFA index of prices for homes financed by conforming mortgages was UP 0.2% for September and UP 4.4% over a year ago.

New Home Sales were down 0.3% for October but are still in an up trend, 17.2% ahead of sales a year ago. The median price of $237,500 is UP 5.7% versus a year ago. The months’ supply is 4.8, near its lowest levels since 2005. The median number of months a new home is on the market before being sold is now down from 7.2 a year ago to 5.9, its lowest level in 5 years. Pending Home Sales (contracts on existing homes) also rose 5.2% in October, are up 13.2% from a year ago, and are at their highest sustained level in 5 years. Demand is definitely picking up.

BUSINESS TIP OF THE WEEK… A successful sales pitch is repetitive. Make your key point at the start, explain it in the middle, then reinforce it at the end. Studies show people trust an idea more after it’s repeated at least three times.

>> Review of Last Week

TIPTOEING ALONG THE FISCAL CLIFF… The Dow stayed above 13,000 for the second week in a row, a bit of a miracle, given investor worries about the fiscal cliff. If the recently re-elected President and Congress can’t come to agreement on deficit-reducing measures by January 1, mandatory tax hikes and spending cuts could send us off that fiscal cliff and back into recession. Market indexes went up and down, as leaders in Washington offered positive and negative opinions on whether “substantive progress,” to use one of their favorite terms, had been made.

October economic data remained mixed but mostly positive. Durable Goods orders were unchanged, but beat an expected decline. The Richmond Fed index shot into positive territory, indicating manufacturing growth in the mid-Atlantic region. New and continuing jobless claims both dipped but remain high. Personal Income stayed flat and Core PCE inflation is still in check. Finally, the second estimate of Q3 GDP was revised up to a 2.7% annual growth rate, not the 3%–4% we need, but edging closer.

For the week, the Dow ended up 0.1%, to 13026; the S&P 500 was up 0.5%, to 1416; and the Nasdaq was up 1.5%, to 3010.

Thanks to investor fears about the fiscal cliff, the safe harbor of bonds looked attractive and prices held nicely. The FNMA 3.5% bond we watch ended the week up .15, at $106.24. National average fixed mortgage rates remain down near record lows in Freddie Mac’s weekly Primary Mortgage Market Survey. Not surprisingly, the Mortgage Bankers Association reported purchase loan applications UP 3% for the week and UP 8% from a year ago.

DID YOU KNOW?… Fiscal cliff refers to the tax and spending cuts expiring on December 31. They include last year’s temporary payroll tax breaks, the 2001 and 2003 Bush tax cuts, and specific business tax cuts. New spending cuts and more taxes to fund the President’s health care reform will also go into effect.

>> This Week’s Forecast

MANUFACTURING, SERVICES, AND, OH YES, JOBS!… This week features the ISM Manufacturing and ISM Services Indexes, both expected off for November, though still above 50, showing modest growth. Somehow, American workers keep upping their output, as Productivity is forecast to rise once again in Q3.

The week closes with the November Jobs Report. This is the read that means the most to us, as employment drives housing. Unfortunately, a modest gain of 90,000 new jobs is predicted, with unemployment back up to 8.0%.

>> 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 Nov Dec 3 – Dec 7

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… Until the Fed sees signs of solid, ongoing economic recovery, FOMC members have vowed to keep rates super low. They think this will be “at least through mid-2015.” 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:

UIE

Nov 19, 2012 – Vol. 10, Issue 47

>> Market Update

QUOTE OF THE WEEK… “Opportunities multiply as they are seized.”–Sun Tzu, ancient Chinese military general, thought to be the author of The Art of War

INFO THAT HITS US WHERE WE LIVE… Investors are seizing the opportunity to invest in Home Depot, the home improvement retailer who’s seizing the opportunities presented by this still young housing recovery. Home Depot just posted adjusted Q3 earnings of 74 cents a share, up 23% from a year ago, evidence there’s a growing number of homeowners sinking money into their properties. Other facts back this up. The U.S. homeowner vacancy rate fell to 1.9% in Q3, a seven-year low. Many feel this signals that the economy has worked off most of the excess housing that had been built.

This better balance in the housing market is boosting home prices and builder confidence. Housing starts are up, as well as construction jobs, following a four-year slump. No wonder investors are bidding up stocks throughout the home improvement sector, including Masco, Whirlpool, Sherwin-Williams, and Home Depot’s competitor Lowe’s. Finally, Realtor.com reports October inventory at 1.76 million units, down 17% from a year ago and 40% below the September 2007 peak. In uncertain times, there’s no place like home.

BUSINESS TIP OF THE WEEK… When you truly believe in your idea, your company, or yourself, then you don’t need to “sell.” You just need to communicate.

>> Review of Last Week

DOWN TIME… Stocks headed down again, the Dow posting its fourth consecutive week of negative performance. Observers think investors are turning this down time in the markets into professional downtime, taking their money off the table as they wait for Washington to come to grips with the so-called fiscal cliff. These are the mandatory tax hikes and spending cuts that kick in January 1 unless politicians reach a deal to cut the 1.3 trillion dollar deficit some other way. The only “up” feeling came from a better than expected New York Empire Manufacturing number and the installation of new Chinese leadership, who should spike their economic growth.

The rest of the economic data disappointed. On the manufacturing front, both the Philadelphia Fed index and October Industrial Production were off the mark and there was a large hike in both initial and continuing unemployment claims. October PPI producer prices were down a little and CPI consumer prices were up only 0.1%, so inflation appears to be under control. But October Retail Sales were down 0.3%.Many felt it was just superstorm Sandy temporarily impacting all the numbers.

For the week, the Dow ended down 1.8%, to 12588; the S&P 500 was down 1.4%, to1360; and the Nasdaq was down 1.8%, to 2853.

With the damage to stocks, traders expected big advances in bonds. But treasuries ended the week with only small gains and trade overall was flat. The FNMA 3.5% bond we watch ended the week off .05, at $106.17. As Washington heads toward the fiscal cliff, investors see a safe haven in mortgage bonds, pushing rates down. National average rates for 30-year fixed rate mortgages hit a new low in Freddie Mac records dating to 1971.The Mortgage Bankers Association reported purchase loan applications UP 11% for the week and UP 22% over a year ago.

DID YOU KNOW?… Sarah Josepha Hale, a magazine editor, persuaded Abraham Lincoln to declare Thanksgiving a national holiday in 1863. She also wrote the nursery rhyme “Mary Had a Little Lamb.”

>> This Week’s Forecast

EXISTING HOMES, HOUSING STARTS, ECONOMIC INDICATORS, TURKEY!… It’s a short week of economic reports, just three days of data. Monday’s Existing Home Sales for October are forecast to be off a little, just like Tuesday’s Housing Starts and Building Permits for October. Wednesday’s Leading Economic Indicators (LEI) indexand Michigan Consumer Sentiment are also expected to be down a bit.

The stock market is closed Thursday for the holiday and will close early at 1 p.m. on Friday. Happy Thanksgiving to you and yours!

>> 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 Nov 19 – Nov 23

>> Federal
Reserve Watch   

Forecasting Federal Reserve
policy changes in coming months… Last week’s release of Fed
meeting minutes revealed they could replace their timeframe for low
rates with data targets, but nothing’s happened yet. 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:

UIE