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Monday, February 20, 2012
>> Market Update -- For the week of February 20, 2012
Friday, February 17, 2012
200 Year Historical Mortgage Rates!
We hope these charts provide food for thought for anyone wondering if now is a good time to get off the fence regarding a home purchase or refinance.
Click Here for the 30 Year FHLMC Rates On 30-Year Fixed-Rate Mortgage Chart.
Click Here for the 200 Year Historical Rates On 30-Year Fixed-Rate Mortgage Chart.
Please give us a call or email if there's anything we can do for you!
Jean Hedges
Senior Loan Officer
PrimeLending, A PlainsCapital Company
5400 Glenwood Ave., Suite 215
Raleigh, NC 27612
Phone: (919) 334-9030
Mobile: (919) 961-6915
Fax: (866) 460-7667
Monday, February 13, 2012
Market Update For the week of February 13, 2012
QUOTE OF THE WEEK..."People can alter their lives by altering their attitudes." -- William James
INFO THAT HITS US WHERE WE LIVE... People's attitudes should surely be altered by new data from the National Association of Home Builders (NAHB). Their survey released on Thursday revealed four record highs hit by home building in 2011. The average size of new homes bumped up to a record 2,522 square feet, a record-high 42% of new homes had at least four bedrooms, 28% had at least three bathrooms and 30% included finished basements, all numbers up substantially over 2010. Countering this, there were a record low 429,000 single-family housing starts for the year.
But there's hope. The NAHB's chief economist forecast a 16% increase for new-home sales and single-family starts for 2012. He cited NAHB estimates of a pent-up demand for 2 million homes coming from households that are doubled-up or waiting to buy a home. Another NAHB sponsored survey revealed 78% of Americans likely to vote in the presidential election said owning a home was one of the most important things in their lives. They feel homeownership is about family and remains part of the American dream. Freddie Mac's chief economist chimed in, "The desire for homeownership long-term is still there."
BUSINESS TIP OF THE WEEK... What about your business makes you happy... and unhappy? The answers can help you discover how to motivate yourself and persuade others, since happiness is the universal motivator.
>> Review of Last Week
IT'S ALL GREEK TO WALL STREET... As of last Friday, Greek politicians couldn't come to agreement with creditors on the latest bailout proposals. That was all investors needed to hear to start selling in earnest, sending stocks down for the week, ending five straight weeks of gains. Eurozone officials are threatening to withhold needed funds unless Greece agrees to austerity measures and signs them into law. The big prob? Political gridlock could take Greece closer to default, which might threaten U.S. financial institutions.
Over here, a light dose of economic data came in mixed, as usual. The Federal deficit for January unexpectedly dropped to $27.4 billion from $50 billion in December. But the Trade deficit ballooned to $48.8 billion. Initial weekly jobless claims dipped to 358,000, but continuing claims grew to 3.52 million. Finally, preliminary University of Michigan consumer sentiment for February fell to 72.5 from 75.0 the prior month.
For the week, the Dow ended down 0.5%, at 12801; the S&P 500 closed down 0.2%, at 1343; and the Nasdaq slipped 0.1%, to 2904.
Bonds saw heavy selling pressure early in the week, but those Greek default fears helped prices recover a bit on Friday. The FNMA 3.5% bond we watch ended the week down just .08, at $103.16. Following the prior week's better than expected jobs report, national average rates inched up for some types of mortgages in Freddie Mac's weekly survey. But mortgage rates overall remain historically low.
DID YOU KNOW?...This week's Producer Price Index (PPI) is an inflation indicator for the wholesale prices of a basket of raw materials and semi-finished goods (but not services). It's a leading indicator of consumer inflation.
>> This Week’s Forecast
HOUSING STARTS, PLUS RETAIL, MANUFACTURING, THE FED, INFLATION... We're back to a ton of economic data. Thursday's January Housing Starts will grab our attention, forecast up a smidge, and Building Permits, expected a bit down. January Retail Sales are expected up, both with and without autos. The several manufacturing reads -- Empire State, Industrial Production, Capacity Utilization and Philadelphia Fed -- should also inch up.
Wednesday's FOMC Minutes from the Fed's January 25 meeting might reveal more on why they want to extend exceptionally low interest rates til late 2014. The festivities end with PPI and CPI inflation reads, expected to remain within Fed targets.
>> 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 13 – Feb 17
Date Time (ET) Release For Consensus Prior Impact
Tu Feb 14 08:30 Retail Sales Jan 0.8% 0.1% HIGH
Tu Feb 14 08:30 Retail Sales ex-auto Jan 0.5% -0.2% HIGH
Tu Feb 14 10:00 Business Inventories Dec 0.5% 0.3% Moderate
W Feb 15 08:30 Empire State Manufacturing Index Feb 14.0 13.5 Moderate
W Feb 15 09:15 Industrial Production Jan 0.6% 0.4% Moderate
W Feb 15 09:15 Capacity Utilization Jan 78.6% 78.1% Moderate
W Feb 15 10:30 Crude Inventories 2/11 NA 0.304M Moderate
W Feb 15 14:00 FOMC Minutes 1/25 NA NA HIGH
Th Feb 16 08:30 Initial Unemployment Claims 2/11 365K 358K Moderate
Th Feb 16 08:30 Continuing Unemployment Claims 2/4 3.505M 3.515M Moderate
Th Feb 16 08:30 Housing Starts Jan 670K 657K Moderate
Th Feb 16 08:30 Building Permits Jan 675K 679K Moderate
Th Feb 16 08:30 Producer Price Index (PPI) Jan 0.3% -0.1% Moderate
Th Feb 16 08:30 Core PPI Jan 0.1% 0.3% Moderate
Th Feb 16 10:00 Philadelphia Fed Manufacturing Index Feb 10.0 7.3 HIGH
F Feb 17 08:30 Consumer Price Index (CPI) Jan 0.3% 0.0% HIGH
F Feb 17 08:30 Core CPI Jan 0.2% 0.1% HIGH
F Feb 17 10:00 Leading Economic Indicators (LEI) Jan 0.5% 0.4% Moderate
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months... On January 25, the Fed pledged to keep the Funds Rate extra low through late 2014. Economists expect no change near term. 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
Mar 13 0%–0.25%
Apr 25 0%–0.25%
Jun 20 0%–0.25%
Probability of change from current policy:
After FOMC meeting on: Consensus
Mar 13 <1%
Apr 25 <1%
Jun 20 <1%
INFO THAT HITS US WHERE WE LIVE... People's attitudes should surely be altered by new data from the National Association of Home Builders (NAHB). Their survey released on Thursday revealed four record highs hit by home building in 2011. The average size of new homes bumped up to a record 2,522 square feet, a record-high 42% of new homes had at least four bedrooms, 28% had at least three bathrooms and 30% included finished basements, all numbers up substantially over 2010. Countering this, there were a record low 429,000 single-family housing starts for the year.
But there's hope. The NAHB's chief economist forecast a 16% increase for new-home sales and single-family starts for 2012. He cited NAHB estimates of a pent-up demand for 2 million homes coming from households that are doubled-up or waiting to buy a home. Another NAHB sponsored survey revealed 78% of Americans likely to vote in the presidential election said owning a home was one of the most important things in their lives. They feel homeownership is about family and remains part of the American dream. Freddie Mac's chief economist chimed in, "The desire for homeownership long-term is still there."
BUSINESS TIP OF THE WEEK... What about your business makes you happy... and unhappy? The answers can help you discover how to motivate yourself and persuade others, since happiness is the universal motivator.
>> Review of Last Week
IT'S ALL GREEK TO WALL STREET... As of last Friday, Greek politicians couldn't come to agreement with creditors on the latest bailout proposals. That was all investors needed to hear to start selling in earnest, sending stocks down for the week, ending five straight weeks of gains. Eurozone officials are threatening to withhold needed funds unless Greece agrees to austerity measures and signs them into law. The big prob? Political gridlock could take Greece closer to default, which might threaten U.S. financial institutions.
Over here, a light dose of economic data came in mixed, as usual. The Federal deficit for January unexpectedly dropped to $27.4 billion from $50 billion in December. But the Trade deficit ballooned to $48.8 billion. Initial weekly jobless claims dipped to 358,000, but continuing claims grew to 3.52 million. Finally, preliminary University of Michigan consumer sentiment for February fell to 72.5 from 75.0 the prior month.
For the week, the Dow ended down 0.5%, at 12801; the S&P 500 closed down 0.2%, at 1343; and the Nasdaq slipped 0.1%, to 2904.
Bonds saw heavy selling pressure early in the week, but those Greek default fears helped prices recover a bit on Friday. The FNMA 3.5% bond we watch ended the week down just .08, at $103.16. Following the prior week's better than expected jobs report, national average rates inched up for some types of mortgages in Freddie Mac's weekly survey. But mortgage rates overall remain historically low.
DID YOU KNOW?...This week's Producer Price Index (PPI) is an inflation indicator for the wholesale prices of a basket of raw materials and semi-finished goods (but not services). It's a leading indicator of consumer inflation.
>> This Week’s Forecast
HOUSING STARTS, PLUS RETAIL, MANUFACTURING, THE FED, INFLATION... We're back to a ton of economic data. Thursday's January Housing Starts will grab our attention, forecast up a smidge, and Building Permits, expected a bit down. January Retail Sales are expected up, both with and without autos. The several manufacturing reads -- Empire State, Industrial Production, Capacity Utilization and Philadelphia Fed -- should also inch up.
Wednesday's FOMC Minutes from the Fed's January 25 meeting might reveal more on why they want to extend exceptionally low interest rates til late 2014. The festivities end with PPI and CPI inflation reads, expected to remain within Fed targets.
>> 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 13 – Feb 17
Date Time (ET) Release For Consensus Prior Impact
Tu Feb 14 08:30 Retail Sales Jan 0.8% 0.1% HIGH
Tu Feb 14 08:30 Retail Sales ex-auto Jan 0.5% -0.2% HIGH
Tu Feb 14 10:00 Business Inventories Dec 0.5% 0.3% Moderate
W Feb 15 08:30 Empire State Manufacturing Index Feb 14.0 13.5 Moderate
W Feb 15 09:15 Industrial Production Jan 0.6% 0.4% Moderate
W Feb 15 09:15 Capacity Utilization Jan 78.6% 78.1% Moderate
W Feb 15 10:30 Crude Inventories 2/11 NA 0.304M Moderate
W Feb 15 14:00 FOMC Minutes 1/25 NA NA HIGH
Th Feb 16 08:30 Initial Unemployment Claims 2/11 365K 358K Moderate
Th Feb 16 08:30 Continuing Unemployment Claims 2/4 3.505M 3.515M Moderate
Th Feb 16 08:30 Housing Starts Jan 670K 657K Moderate
Th Feb 16 08:30 Building Permits Jan 675K 679K Moderate
Th Feb 16 08:30 Producer Price Index (PPI) Jan 0.3% -0.1% Moderate
Th Feb 16 08:30 Core PPI Jan 0.1% 0.3% Moderate
Th Feb 16 10:00 Philadelphia Fed Manufacturing Index Feb 10.0 7.3 HIGH
F Feb 17 08:30 Consumer Price Index (CPI) Jan 0.3% 0.0% HIGH
F Feb 17 08:30 Core CPI Jan 0.2% 0.1% HIGH
F Feb 17 10:00 Leading Economic Indicators (LEI) Jan 0.5% 0.4% Moderate
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months... On January 25, the Fed pledged to keep the Funds Rate extra low through late 2014. Economists expect no change near term. 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
Mar 13 0%–0.25%
Apr 25 0%–0.25%
Jun 20 0%–0.25%
Probability of change from current policy:
After FOMC meeting on: Consensus
Mar 13 <1%
Apr 25 <1%
Jun 20 <1%
Monday, January 30, 2012
Market Update for the Week of January 30, 2012
QUOTE OF THE WEEK..."Before everything else, getting ready is the secret of success." --Henry Ford
INFO THAT HITS US WHERE WE LIVE...Getting ready for a recovery could be the theme of last week's housing reports. Pending Home Sales, after hitting a 19-month high in November, dipped a bit for December, yet came in 5.6% above where they were a year ago. The National Association of Realtors chief economist observed, "Even with a modest decline, the preceding two months of contract activity are the highest in the past four years outside of the homebuyer tax credit period."
Thursday saw December New Home Sales drop 2.2%, to a lower-than-expected 307,000 annual rate. Yet sales remain in the narrow range they've occupied since May 2010. And the best news was that new home inventories dropped to 157,000, the lowest level on record, since 1963. Unsold new homes under construction and unsold completed new homes are at or near record lows. Experts say this is what's needed to get ready for a sustained housing recovery. Finally, the FHFA price index for homes bought with conforming mortgages was UP 1% in November.
BUSINESS TIP OF THE WEEK... Our motivation colors our work. People driven by money can appear self-serving. But people driven to do the best for their clients usually come off as effective and valuable.
>> Review of Last Week
UP AND DOWN... It was a week where investors couldn't decide if they felt positive or negative about the economy and the major market indexes reflected this, with two of them heading up for the week but the third one ending down. The big news? The Fed extended its pledge to hold interest rates exceptionally low -- from mid-2013 to late 2014. And for the first time, the FOMC set a specific inflation goal: 2%. Also for the first time, the Fed released the rate expectations of each member. The median showed no change this year or next and a hike to only 0.75% by the end of 2014.
Other good news came with Durable Goods Orders, up a better than expected 3% for December. Unfortunately, this was followed by initial jobless claims, up 21,000 for the week, to 377,000. Finally, the Advance GDP estimate for Q4 came in at a 2.8% annual rate. This was better than Q3, but less than expected. Economists were also disappointed that a large part of the increase was only due to an unexpected buildup in inventories.
For the week, the Dow ended down 0.5%, at 12661; the S&P 500 closed up 0.1%, at 1316; and the Nasdaq gained 1.1%, to 2817.
The Fed's announcement it will hold rates low even longer, plus their inflation target, did wonders for bonds. The FNMA 3.5% bond we watch ended the week UP 1.01, to $103.22. National average mortgage rates edged up a bit in Freddie Mac's weekly survey of conforming mortgages, though they're still at historically low levels. Experts put this to the improving housing market data.
DID YOU KNOW?...Tuesday's Employment Cost Index measures changes in wages, benefits and bonuses for a group of occupations. It's an inflation indicator because prices can go up with increased labor costs, unless offset by productivity gains.
>> This Week’s Forecast
INFLATION, MANUFACTURING, JANUARY JOBS... Hot buttons this week touch all the hot topics. Monday we see the Fed's favorite inflation measure, Core PCE Prices, expected to stay within the central bank's guidelines. The manufacturing sector gets covered in Tuesday's Chicago PMI, forecast down a trifle, but Wednesday's ISM Index is predicted up for the month.
The hottest of the hot data comes Friday, with the January Employment Report. The forecast is for a smaller gain in payrolls than last month's. Historically, as employment improves, it pulls housing along with it.
>> 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 30 – Feb 3
Date Time (ET) Release For Consensus Prior Impact
M Jan 30 08:30 Personal Income Dec 0.4% 0.1% Moderate
M Jan 30 08:30 Personal Spending Dec 0.1% 0.1% HIGH
M Jan 30 08:30 Core PCE Prices Dec 0.2% 0.1% HIGH
Tu Jan 31 08:30 Employment Cost Index Q4 0.4% 0.3% HIGH
Tu Jan 31 09:45 Chicago PMI Jan 62.0 62.5 HIGH
Tu Jan 31 10:00 Consumer Confidence Jan 67.0 64.5 Moderate
W Feb 1 10:00 ISM Index Jan 54.7 53.9 HIGH
W Feb 1 10:30 Crude Inventories 1/28 NA NA Moderate
Th Feb 2 08:30 Initial Unemployment Claims 1/28 375K 377K Moderate
Th Feb 2 08:30 Continuing Unemployment Claims 1/21 3.525M 3.550M Moderate
Th Feb 2 08:30 Productivity-Prelim. Q4 0.6% 2.3% Moderate
F Feb 3 08:30 Average Workweek Jan 34.4 34.4 HIGH
F Feb 3 08:30 Hourly Earnings Jan 0.2% 0.2% HIGH
F Feb 37 08:30 Nonfarm Payrolls Jan 170K 200K HIGH
F Feb 3 08:30 Unemployment Rate Jan 8.5% 8.5% HIGH
F Feb 3 10:00 ISM Services Jan 53.1 52.6 Moderate
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months... At last week's FOMC meeting, the Fed extended its goal of keeping the Funds Rate super low through late 2014. 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
Mar 13 0%–0.25%
Apr 25 0%–0.25%
Jun 20 0%–0.25%
Probability of change from current policy:
After FOMC meeting on: Consensus
Mar 13 <1%
Apr 25 <1%
Jun 20 <1%
INFO THAT HITS US WHERE WE LIVE...Getting ready for a recovery could be the theme of last week's housing reports. Pending Home Sales, after hitting a 19-month high in November, dipped a bit for December, yet came in 5.6% above where they were a year ago. The National Association of Realtors chief economist observed, "Even with a modest decline, the preceding two months of contract activity are the highest in the past four years outside of the homebuyer tax credit period."
Thursday saw December New Home Sales drop 2.2%, to a lower-than-expected 307,000 annual rate. Yet sales remain in the narrow range they've occupied since May 2010. And the best news was that new home inventories dropped to 157,000, the lowest level on record, since 1963. Unsold new homes under construction and unsold completed new homes are at or near record lows. Experts say this is what's needed to get ready for a sustained housing recovery. Finally, the FHFA price index for homes bought with conforming mortgages was UP 1% in November.
BUSINESS TIP OF THE WEEK... Our motivation colors our work. People driven by money can appear self-serving. But people driven to do the best for their clients usually come off as effective and valuable.
>> Review of Last Week
UP AND DOWN... It was a week where investors couldn't decide if they felt positive or negative about the economy and the major market indexes reflected this, with two of them heading up for the week but the third one ending down. The big news? The Fed extended its pledge to hold interest rates exceptionally low -- from mid-2013 to late 2014. And for the first time, the FOMC set a specific inflation goal: 2%. Also for the first time, the Fed released the rate expectations of each member. The median showed no change this year or next and a hike to only 0.75% by the end of 2014.
Other good news came with Durable Goods Orders, up a better than expected 3% for December. Unfortunately, this was followed by initial jobless claims, up 21,000 for the week, to 377,000. Finally, the Advance GDP estimate for Q4 came in at a 2.8% annual rate. This was better than Q3, but less than expected. Economists were also disappointed that a large part of the increase was only due to an unexpected buildup in inventories.
For the week, the Dow ended down 0.5%, at 12661; the S&P 500 closed up 0.1%, at 1316; and the Nasdaq gained 1.1%, to 2817.
The Fed's announcement it will hold rates low even longer, plus their inflation target, did wonders for bonds. The FNMA 3.5% bond we watch ended the week UP 1.01, to $103.22. National average mortgage rates edged up a bit in Freddie Mac's weekly survey of conforming mortgages, though they're still at historically low levels. Experts put this to the improving housing market data.
DID YOU KNOW?...Tuesday's Employment Cost Index measures changes in wages, benefits and bonuses for a group of occupations. It's an inflation indicator because prices can go up with increased labor costs, unless offset by productivity gains.
>> This Week’s Forecast
INFLATION, MANUFACTURING, JANUARY JOBS... Hot buttons this week touch all the hot topics. Monday we see the Fed's favorite inflation measure, Core PCE Prices, expected to stay within the central bank's guidelines. The manufacturing sector gets covered in Tuesday's Chicago PMI, forecast down a trifle, but Wednesday's ISM Index is predicted up for the month.
The hottest of the hot data comes Friday, with the January Employment Report. The forecast is for a smaller gain in payrolls than last month's. Historically, as employment improves, it pulls housing along with it.
>> 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 30 – Feb 3
Date Time (ET) Release For Consensus Prior Impact
M Jan 30 08:30 Personal Income Dec 0.4% 0.1% Moderate
M Jan 30 08:30 Personal Spending Dec 0.1% 0.1% HIGH
M Jan 30 08:30 Core PCE Prices Dec 0.2% 0.1% HIGH
Tu Jan 31 08:30 Employment Cost Index Q4 0.4% 0.3% HIGH
Tu Jan 31 09:45 Chicago PMI Jan 62.0 62.5 HIGH
Tu Jan 31 10:00 Consumer Confidence Jan 67.0 64.5 Moderate
W Feb 1 10:00 ISM Index Jan 54.7 53.9 HIGH
W Feb 1 10:30 Crude Inventories 1/28 NA NA Moderate
Th Feb 2 08:30 Initial Unemployment Claims 1/28 375K 377K Moderate
Th Feb 2 08:30 Continuing Unemployment Claims 1/21 3.525M 3.550M Moderate
Th Feb 2 08:30 Productivity-Prelim. Q4 0.6% 2.3% Moderate
F Feb 3 08:30 Average Workweek Jan 34.4 34.4 HIGH
F Feb 3 08:30 Hourly Earnings Jan 0.2% 0.2% HIGH
F Feb 37 08:30 Nonfarm Payrolls Jan 170K 200K HIGH
F Feb 3 08:30 Unemployment Rate Jan 8.5% 8.5% HIGH
F Feb 3 10:00 ISM Services Jan 53.1 52.6 Moderate
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months... At last week's FOMC meeting, the Fed extended its goal of keeping the Funds Rate super low through late 2014. 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
Mar 13 0%–0.25%
Apr 25 0%–0.25%
Jun 20 0%–0.25%
Probability of change from current policy:
After FOMC meeting on: Consensus
Mar 13 <1%
Apr 25 <1%
Jun 20 <1%
Monday, January 23, 2012
Market Update for the Week of January 23, 2012
QUOTE OF THE WEEK..."Happiness is not a state to arrive at, but a manner of traveling." --Margaret Lee Runbeck
INFO THAT HITS US WHERE WE LIVE...Well, we can all make our way with a bit of a smile on our faces, courtesy of the latest Housing Starts numbers. At first blush, the December report seemed disappointing, down 4% for the month. But starts overall are UP 24.9% from a year ago and December's drop was all from multi-family starts, very volatile month-to-month. Single-family starts were UP 4.4% for the month and UP 11.6% for the year. No wonder the National Association of Home Builders confidence index went to 25, its highest reading since 2007.
For those who still couldn't put on a happy face, Friday's data should have done the trick. Existing Home Sales were UP 5% in December, their third consecutive gain, to their highest level since January 2011. The inventory of existing homes is down 21% from last year and the months' supply dropped to 6.2, the lowest level since April 2006. For all of 2011, sales of single-family homes, townhomes, condos and co-ops rose 1.7%, to 4.26 million units.
BUSINESS TIP OF THE WEEK... There are so many variables in business, you can't know exactly how you will reach your goal. So what matters most is your determination to get there.
>> Review of Last Week
HAPPY NEW YEAR SO FAR...All three major market indexes ended ahead again for the week, chalking up very nice gains for the very young year--the Dow UP 4.1%, the S&P 500 UP 4.6% and the Nasdaq UP 7.0% thus far. Investor sentiment is generally a good leading indicator for the economy, but the recovery is still slow and the economic reports continue to deliver mixed messages.
Industrial Production, up 0.4% in December, fell short of expectations. Yet two regional manufacturing indexes did better for the month: the Empire State and the Philadelphia Fed. On the inflation front, producer prices were down 0.1%, though Core prices excluding food and energy were up 0.3%. The Consumer Price Index was unchanged, but Core CPI went up 0.1%. The best news? Weekly Initial Unemployment Claims fell to 352,000, their lowest level since April 2008.
For the week, the Dow ended UP 2.4%, at 12720; the S&P 500 closed UP 2.0%, to 1315; and the Nasdaq gained 2.8%, to 2787.
With stocks rallying, heavy selling in the bond market sent prices southward. Investors were also calmed by hopes of a Greek debt deal, though that hasn't happened yet. The FNMA 3.5% bond we watch ended the week down .87 to $102.21. Freddie Mac's survey of conforming mortgages showed national average mortgage rates virtually unchanged, staying at record low levels for another week.
DID YOU KNOW?...This week's Advanced GDP number will be revised twice, with next month's Preliminary GDP and then Final GDP a month later. These revisions can impact financial markets.
>> This Week’s Forecast
PENDING HOME SALES, NEW HOME SALES, THE FED, THE GDP... This week isn't missing much in the way of interesting topics. December Pending Home Sales come Wednesday, forecast down a bit after a November gain. The Fed's FOMC Rate Decision shouldn't change anything, but for the first time, Fed member's outlooks on interest rates will be released. Following this will be Chairman Bernanke's press conference and that could be interesting.
December New Home Sales happen Thursday, projected to inch up a bit. Friday we get how the overall economy did in Q4, with the Advanced GDP estimate. Gross Domestic Product is expected to climb from an anemic 1.8% to a more acceptable 3.1%.
>> 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 23 – Jan 27
Date Time (ET) Release For Consensus Prior Impact
W Jan 25 10:00 Pending Home Sales Dec -3.0% 7.3% Moderate
W Jan 25 10:30 Crude Inventories 1/21 NA -3.438M Moderate
W Jan 25 12:30 FOMC Rate Decision 1/25 0%-0.25% 0%-0.25% HIGH
Th Jan 26 08:30 Initial Unemployment Claims 1/21 375K 352K Moderate
Th Jan 26 08:30 Continuing Unemployment Claims 1/14 3.550M 3.432M Moderate
Th Jan 26 08:30 Durable Goods Orders Dec 2.0% 3.7% Moderate
Th Jan 26 10:00 New Home Sales Dec 322K 315K Moderate
Th Jan 26 10:00 Leading Economic Indicators (LEI) Dec 0.7% 0.5% Moderate
F Jan 27 08:30 GDP-Adv. Q4 3.1% 1.8% Moderate
F Jan 27 08:30 GDP Chain Deflator-Adv. Q4 1.5% 2.6% Moderate
F Jan 27 09:55 U. of Michigan Consumer Sentiment-Final Jan 74.2 74.0 Moderate
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months... Virtually all the experts say the Fed Funds Rate will stay at its super low level coming out of 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%
After FOMC meeting on: Consensus
Jan 25 0%–0.25%
Mar 13 0%–0.25%
Apr 25 0%–0.25%
Probability of change from current policy:
After FOMC meeting on: Consensus
Jan 25 <1%
Mar 13 <1%
Apr 25 <1%
INFO THAT HITS US WHERE WE LIVE...Well, we can all make our way with a bit of a smile on our faces, courtesy of the latest Housing Starts numbers. At first blush, the December report seemed disappointing, down 4% for the month. But starts overall are UP 24.9% from a year ago and December's drop was all from multi-family starts, very volatile month-to-month. Single-family starts were UP 4.4% for the month and UP 11.6% for the year. No wonder the National Association of Home Builders confidence index went to 25, its highest reading since 2007.
For those who still couldn't put on a happy face, Friday's data should have done the trick. Existing Home Sales were UP 5% in December, their third consecutive gain, to their highest level since January 2011. The inventory of existing homes is down 21% from last year and the months' supply dropped to 6.2, the lowest level since April 2006. For all of 2011, sales of single-family homes, townhomes, condos and co-ops rose 1.7%, to 4.26 million units.
BUSINESS TIP OF THE WEEK... There are so many variables in business, you can't know exactly how you will reach your goal. So what matters most is your determination to get there.
>> Review of Last Week
HAPPY NEW YEAR SO FAR...All three major market indexes ended ahead again for the week, chalking up very nice gains for the very young year--the Dow UP 4.1%, the S&P 500 UP 4.6% and the Nasdaq UP 7.0% thus far. Investor sentiment is generally a good leading indicator for the economy, but the recovery is still slow and the economic reports continue to deliver mixed messages.
Industrial Production, up 0.4% in December, fell short of expectations. Yet two regional manufacturing indexes did better for the month: the Empire State and the Philadelphia Fed. On the inflation front, producer prices were down 0.1%, though Core prices excluding food and energy were up 0.3%. The Consumer Price Index was unchanged, but Core CPI went up 0.1%. The best news? Weekly Initial Unemployment Claims fell to 352,000, their lowest level since April 2008.
For the week, the Dow ended UP 2.4%, at 12720; the S&P 500 closed UP 2.0%, to 1315; and the Nasdaq gained 2.8%, to 2787.
With stocks rallying, heavy selling in the bond market sent prices southward. Investors were also calmed by hopes of a Greek debt deal, though that hasn't happened yet. The FNMA 3.5% bond we watch ended the week down .87 to $102.21. Freddie Mac's survey of conforming mortgages showed national average mortgage rates virtually unchanged, staying at record low levels for another week.
DID YOU KNOW?...This week's Advanced GDP number will be revised twice, with next month's Preliminary GDP and then Final GDP a month later. These revisions can impact financial markets.
>> This Week’s Forecast
PENDING HOME SALES, NEW HOME SALES, THE FED, THE GDP... This week isn't missing much in the way of interesting topics. December Pending Home Sales come Wednesday, forecast down a bit after a November gain. The Fed's FOMC Rate Decision shouldn't change anything, but for the first time, Fed member's outlooks on interest rates will be released. Following this will be Chairman Bernanke's press conference and that could be interesting.
December New Home Sales happen Thursday, projected to inch up a bit. Friday we get how the overall economy did in Q4, with the Advanced GDP estimate. Gross Domestic Product is expected to climb from an anemic 1.8% to a more acceptable 3.1%.
>> 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 23 – Jan 27
Date Time (ET) Release For Consensus Prior Impact
W Jan 25 10:00 Pending Home Sales Dec -3.0% 7.3% Moderate
W Jan 25 10:30 Crude Inventories 1/21 NA -3.438M Moderate
W Jan 25 12:30 FOMC Rate Decision 1/25 0%-0.25% 0%-0.25% HIGH
Th Jan 26 08:30 Initial Unemployment Claims 1/21 375K 352K Moderate
Th Jan 26 08:30 Continuing Unemployment Claims 1/14 3.550M 3.432M Moderate
Th Jan 26 08:30 Durable Goods Orders Dec 2.0% 3.7% Moderate
Th Jan 26 10:00 New Home Sales Dec 322K 315K Moderate
Th Jan 26 10:00 Leading Economic Indicators (LEI) Dec 0.7% 0.5% Moderate
F Jan 27 08:30 GDP-Adv. Q4 3.1% 1.8% Moderate
F Jan 27 08:30 GDP Chain Deflator-Adv. Q4 1.5% 2.6% Moderate
F Jan 27 09:55 U. of Michigan Consumer Sentiment-Final Jan 74.2 74.0 Moderate
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months... Virtually all the experts say the Fed Funds Rate will stay at its super low level coming out of 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%
After FOMC meeting on: Consensus
Jan 25 0%–0.25%
Mar 13 0%–0.25%
Apr 25 0%–0.25%
Probability of change from current policy:
After FOMC meeting on: Consensus
Jan 25 <1%
Mar 13 <1%
Apr 25 <1%
Monday, January 16, 2012
Market Update For the week of January 16, 2012
QUOTE OF THE WEEK..."If you have to forecast, forecast often."--Edgar R. Fiedler
INFO THAT HITS US WHERE WE LIVE...Economist Fiedler, Assistant Treasury Secretary under Presidents Nixon and Ford, knew that wise forecasters give themselves lots of opportunities for revisions. This time of year, the focus is on forecasts and even though many will soon be revised, some are worth considering. The chairman of the Fisher Center for Real Estate at the University of California, Berkeley, feels home prices have bottomed and are increasing, though not rebounding, where there's strong job growth. But other economists anticipate a 5% decline in home prices over the next two years.
Several industry watchers expect mortgage rates to stay low in 2012, especially the first half of the year. But buyers and those looking to refinance shouldn't drag their feet. Freddie Mac's chief economist expects rates to rise at least somewhat during the second half of the year. Fannie Mae's chief economist thinks rates will stay flat most of the year, but may go up a tick the last quarter. And he's hopeful lenders will work with more buyers with good credit scores.
BUSINESS TIP OF THE WEEK...Don't fall victim to "analysis paralysis," putting off a decision until you've evaluated every possible option. Successful people just focus on the critical details, then act.
>> Review of Last Week
SOMEHOW STAYING POSITIVE...From little guys to big time investors, we're all trying to keep our spirits up on the good news and patiently wait out the bad. This week had a bit of both, ending Friday with the disappointing report that France lost its "AAA" credit rating and Italy and Spain are expected to drop a couple of notches in their ratings as well. But investors found enough encouragement to help stocks post a modest gain for the second trading week of the year.
One thing that made everyone upbeat was the latest University of Michigan Consumer Sentiment, which shot up from December's 69.9 to a preliminary reading of 74.0 for January, its highest level since May 2011. But disappointing news came with December Retail Sales--up just 0.1% overall and down 0.2%, excluding autos. The Fed's Beige Book noted a modest increase in economic activity but said nothing to allay concerns over the slow pace of recovery. Finally, the trade deficit grew to $47.8 billion with a drop in exports.
For the week, the Dow ended UP 0.5%, at 12422; the S&P 500 closed UP 0.9%, to 1289; and the Nasdaq gained 1.4%, to 2711.
The bond market enjoyed the benefits of the flight to safety by investors who had new reasons to fret over the European sovereign debt situation. The FNMA 3.5% bond we watch ended the week UP .03, at $103.08. National average rates for all types of mortgages tracked by Freddie Mac hit new lows for the week ending last Thursday.
DID YOU KNOW?...Inflation is the overall general upward price movement of goods and services in an economy, usually as measured by this week's Consumer Price Index (CPI) and Producer Price Index (PPI).
>> This Week’s Forecast
HOME BUILDING, EXISTING HOME SALES, INFLATION... Housing news comes Thursday with December Housing Starts and Building Permits gauging the state of new construction. The annual rates are expected to dip a little, staying just under 700,000. Friday's Existing Home Sales for December are expected to rise to 4.57 million, which is encouraging.
The week also features December PPI wholesale inflation readings, forecast holding in safe territory, and consumer CPI inflation numbers, also predicted to hold steady. Monday, U.S. markets are closed in observance of Martin Luther King, Jr., Day.
>> 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 16 – Jan 20
Date Time (ET) Release For Consensus Prior Impact
Tu Jan 17 08:30 NY Empire State Manufacturing Jan 10.0 9.5 Moderate
W Jan 18 08:30 Producer Price Index (PPI) Dec 0.1% 0.3% Moderate
W Jan 18 08:30 Core PPI Dec 0.1% 0.1% Moderate
W Jan 18 09:15 Industrial Production Dec 0.5% -0.2% Moderate
W Jan 18 09:15 Capacity Utilization Dec 78.1% 77.8% Moderate
Th Jan 19 08:30 Initial Unemployment Claims 1/14 387K 399K Moderate
Th Jan 19 08:30 Continuing Unemployment Claims 1/7 3.613M 3.628M Moderate
Th Jan 19 08:30 Consumer Price Index (CPI) Dec 0.1% 0.0% HIGH
Th Jan 19 08:30 Core CPI Dec 0.1% 0.2% HIGH
Th Jan 19 08:30 Housing Starts Dec 670K 685K Moderate
Th Jan 19 08:30 Building Permits Dec 680K 681K Moderate
Th Jan 19 10:00 Philadelphia Fed Manufacturing Jan 10.0 10.3 HIGH
Th Jan 19 11:00 Crude Inventories 1/14 NA 4.958M Moderate
F Jan 20 10:00 Existing Home Sales Dec 4.57M 4.42M Moderate
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months... The experts expect the Fed Funds Rate to stay at super low levels. 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
Jan 25 0%–0.25%
Mar 13 0%–0.25%
Apr 25 0%–0.25%
Probability of change from current policy:
After FOMC meeting on: Consensus
Jan 25 <1%
Mar 13 <1%
Apr 25 <1%
Tuesday, January 10, 2012
Thanks Uncle Sam...
Pursuant to the Temporary Payroll Tax Cut Continuation Act of 2011, the Federal Housing Finance Agency (FHFA) has imposed a mandatory price increase which will be paid for by increasing the fees charged to mortgage lenders by Government Sponsored Entities (GSE) such as Fannie Mae and Freddie Mac.
This Act provides for a two-month extension of the social security tax cut of 4.2% from the original rate of 6.2%. The extension saves approximately $1,000 per household
What does this mean to you?
Beginning today, January 10, 2012, our Investors have imposed an across the board price hike that impacts rates and lock extensions. We are anticipating an estimated rate increase of 0.125%.
This Act provides for a two-month extension of the social security tax cut of 4.2% from the original rate of 6.2%. The extension saves approximately $1,000 per household
What does this mean to you?
Beginning today, January 10, 2012, our Investors have imposed an across the board price hike that impacts rates and lock extensions. We are anticipating an estimated rate increase of 0.125%.
Market Update For the week of January 9, 2012
QUOTE OF THE WEEK..."Opportunities are disguised by hard work, so most people don't recognize them."--Ann Landers
INFO THAT HITS US WHERE WE LIVE...The latest opportunity in real estate came December 28, when the Federal Housing Administration extended the waiver of its "anti-flipping" rule through the end of 2012. This lets homebuyers, who need FHA-insured financing, purchase homes that were bought by the seller in the last 90 days. And it gives investors looking to rehab and flip properties an expanded market, including first-time homebuyers and others without large down payments, who need FHA-backed loans.
The Mortgage Bankers Association (MBA) reported that during 2011, near-record-low mortgage rates drove more homeowners to seek refinancing, moving that MBA index up more than 60%. But demand for purchase loans fell versus 2010, although that year's activity was boosted by the homebuyer tax credit incentives.
BUSINESS TIP OF THE WEEK...It's great to get organized at the start of a new year. The key is to begin. Focus on just one project. Then break it down into smaller parts and accomplish one thing each day, or week, until done!
>> Review of Last Week
UP START...For investors, 2012 began in the right direction as stocks ended the first week of the year UP. But this result was due mainly to an upsurge on Tuesday that was big enough to offset tepid performances the next three days, when traders got jittery over Europe. Spain was in the spotlight again, with new player Hungary now adding to the financial uncertainty. The net result was a weaker Euro, falling about 0.6% to a new 16-month low of $1.27. Time to take that European vacation.
Encouragement came with manufacturing growing in December at its fastest pace in six months. Weekly initial jobless claims dropped again, to 372,000. The December employment report was an upside surprise, with 200,000 new nonfarm jobs showing up and the unemployment rate inching down to 8.5%. But a few observers were concerned there's probably some seasonality in those numbers. ISM Services, which tracks the sector responsible for over 80% of U.S. jobs, came in a little lower than expected, although still in growth territory.
For the week, the Dow ended UP 1.2%, at 12360; the S&P 500 closed UP 1.6%, to 1278; and the Nasdaq gained 2.7%, to 2674.
The bond market elicited mixed results for the week, with Treasuries trending lower, but continuing Euro worries supported prices elsewhere. The FNMA 3.5% bond we watch ended the week UP .78, at $103.05. Average fixed mortgage rates across the U.S. started the new year at or near record lows as tracked by Freddie Mac's weekly survey.
DID YOU KNOW?..."Home on the Range" is one of the most famous songs with "home" in its title. It was written by Dr. Brewster Higley in 1876 and is the official state song of Kansas.
This Week’s Forecast
FED OPINIONS, HOLIDAY SHOPPING, EXPORTS AND CONSUMER FEELINGS... Wednesday, the Fed's Beige Book reveals views on the economy from Federal Reserve Districts around the country. Thursday will gauge the consumer's enthusiasm for holiday shopping, as measured by December Retail Sales, forecast to be up.
The week ends with the November Trade Balance, expected to grow (not so good) and Michigan Consumer Sentiment, also predicted to increase (good).
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 9 – Jan 13
Date Time (ET) Release For Consensus Prior Impact
W Jan 11 10:30 Crude Inventories 1/7 NA 2.209M Moderate
W Jan 11 14:00 Fed's Beige Book Jan NA NA Moderate
Th Jan 12 08:30 Initial Unemployment Claims 1/7 375K 372K Moderate
Th Jan 12 08:30 Continuing Unemployment Claims 12/31 3.588M 3.595M Moderate
Th Jan 12 08:30 Retail Sales Dec 0.4% 0.2% HIGH
Th Jan 12 08:30 Retail Sales ex-auto Dec 0.4% 0.2% HIGH
Th Jan 12 10:00 Business Inventories Nov 0.5% 0.8% Moderate
F Jan 13 08:30 Trade Balance Nov -$44.3B -$43.5B Moderate
F Jan 13 09:55 Univ. of Michigan Consumer Sentiment Jan 71.0 69.9 Moderate
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months...Economists believe the Fed Funds Rate will stay at super low levels for awhile. 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
Jan 25 0%–0.25%
Mar 13 0%–0.25%
Apr 25 0%–0.25%
Probability of change from current policy:
After FOMC meeting on: Consensus
Jan 25 <1%
Mar 13 <1%
Apr 25 <1%
INFO THAT HITS US WHERE WE LIVE...The latest opportunity in real estate came December 28, when the Federal Housing Administration extended the waiver of its "anti-flipping" rule through the end of 2012. This lets homebuyers, who need FHA-insured financing, purchase homes that were bought by the seller in the last 90 days. And it gives investors looking to rehab and flip properties an expanded market, including first-time homebuyers and others without large down payments, who need FHA-backed loans.
The Mortgage Bankers Association (MBA) reported that during 2011, near-record-low mortgage rates drove more homeowners to seek refinancing, moving that MBA index up more than 60%. But demand for purchase loans fell versus 2010, although that year's activity was boosted by the homebuyer tax credit incentives.
BUSINESS TIP OF THE WEEK...It's great to get organized at the start of a new year. The key is to begin. Focus on just one project. Then break it down into smaller parts and accomplish one thing each day, or week, until done!
>> Review of Last Week
UP START...For investors, 2012 began in the right direction as stocks ended the first week of the year UP. But this result was due mainly to an upsurge on Tuesday that was big enough to offset tepid performances the next three days, when traders got jittery over Europe. Spain was in the spotlight again, with new player Hungary now adding to the financial uncertainty. The net result was a weaker Euro, falling about 0.6% to a new 16-month low of $1.27. Time to take that European vacation.
Encouragement came with manufacturing growing in December at its fastest pace in six months. Weekly initial jobless claims dropped again, to 372,000. The December employment report was an upside surprise, with 200,000 new nonfarm jobs showing up and the unemployment rate inching down to 8.5%. But a few observers were concerned there's probably some seasonality in those numbers. ISM Services, which tracks the sector responsible for over 80% of U.S. jobs, came in a little lower than expected, although still in growth territory.
For the week, the Dow ended UP 1.2%, at 12360; the S&P 500 closed UP 1.6%, to 1278; and the Nasdaq gained 2.7%, to 2674.
The bond market elicited mixed results for the week, with Treasuries trending lower, but continuing Euro worries supported prices elsewhere. The FNMA 3.5% bond we watch ended the week UP .78, at $103.05. Average fixed mortgage rates across the U.S. started the new year at or near record lows as tracked by Freddie Mac's weekly survey.
DID YOU KNOW?..."Home on the Range" is one of the most famous songs with "home" in its title. It was written by Dr. Brewster Higley in 1876 and is the official state song of Kansas.
This Week’s Forecast
FED OPINIONS, HOLIDAY SHOPPING, EXPORTS AND CONSUMER FEELINGS... Wednesday, the Fed's Beige Book reveals views on the economy from Federal Reserve Districts around the country. Thursday will gauge the consumer's enthusiasm for holiday shopping, as measured by December Retail Sales, forecast to be up.
The week ends with the November Trade Balance, expected to grow (not so good) and Michigan Consumer Sentiment, also predicted to increase (good).
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 9 – Jan 13
Date Time (ET) Release For Consensus Prior Impact
W Jan 11 10:30 Crude Inventories 1/7 NA 2.209M Moderate
W Jan 11 14:00 Fed's Beige Book Jan NA NA Moderate
Th Jan 12 08:30 Initial Unemployment Claims 1/7 375K 372K Moderate
Th Jan 12 08:30 Continuing Unemployment Claims 12/31 3.588M 3.595M Moderate
Th Jan 12 08:30 Retail Sales Dec 0.4% 0.2% HIGH
Th Jan 12 08:30 Retail Sales ex-auto Dec 0.4% 0.2% HIGH
Th Jan 12 10:00 Business Inventories Nov 0.5% 0.8% Moderate
F Jan 13 08:30 Trade Balance Nov -$44.3B -$43.5B Moderate
F Jan 13 09:55 Univ. of Michigan Consumer Sentiment Jan 71.0 69.9 Moderate
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months...Economists believe the Fed Funds Rate will stay at super low levels for awhile. 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
Jan 25 0%–0.25%
Mar 13 0%–0.25%
Apr 25 0%–0.25%
Probability of change from current policy:
After FOMC meeting on: Consensus
Jan 25 <1%
Mar 13 <1%
Apr 25 <1%
Tuesday, January 3, 2012
Raleigh Ranks as America's Number 1 City by Businessweek
Why it’s ranked:
"Taking more than a dozen data points into account, Raleigh ranks as the best place to live in the U.S. The city sports a high number of bars, restaurants, and cultural institutions as well as a thriving social scene, great parks, and good schools. Raleigh reflects the cultural graces that go along with anchoring the so-called research triangle, home to North Carolina State University, Duke University, and the University of North Carolina at Chapel Hill. Of course, it’s also much more. The city offers a great deal on nights and weekends, from concerts and opera to the 30,000-sq.-ft. State Farmer’s Market. North Carolina’s state capital is tops in our book."
http://www.businessweek.com/lifestyle/which-is-americas-best-city-09202011.html
"Taking more than a dozen data points into account, Raleigh ranks as the best place to live in the U.S. The city sports a high number of bars, restaurants, and cultural institutions as well as a thriving social scene, great parks, and good schools. Raleigh reflects the cultural graces that go along with anchoring the so-called research triangle, home to North Carolina State University, Duke University, and the University of North Carolina at Chapel Hill. Of course, it’s also much more. The city offers a great deal on nights and weekends, from concerts and opera to the 30,000-sq.-ft. State Farmer’s Market. North Carolina’s state capital is tops in our book."
Market Update -- For the week of January 2, 2012
QUOTE OF THE WEEK..."Of all the things you wear, your expression is the most important." --Anonymous
INFO THAT HITS US WHERE WE LIVE...It's good to show your best face to the world as the new year begins (see Business Tip of the Week, below) and that just got easier to do. Last week's Pending Home Sales index from the National Association of Realtors (NAR) went UP 7.3% in November, hitting its highest level since April 2010! And that earlier reading was artificially boosted, as buyers rushed to beat the deadline for last year's home buyer tax credit.
The NAR's chief economist commented, "Housing affordability conditions are at a record high and there is pent-up demand from buyers who've been on the sidelines.... The sustained rise in contract activity suggests that closed existing-home sales...should continue to improve in the months ahead." The S&P Case-Shiller index for October showed minor price drops in 19 of the 20 surveyed metro areas, but the index was UP 1.9% from its post-crisis low in March 2011.
BUSINESS TIP OF THE WEEK...The new year is a great time to remember that successful people think positive. They're not unrealistic, but they do see the positive side of an opportunity and firmly believe in their ability to reach their goals.
Review of Last Week
GOODBYE, 2011!...The wild year on Wall Street ended not with a bang but a whimper, as stocks slumped slightly for the week on very light trading. Volatility was the theme for 2011, although when all was said and done, the broadly based S&P 500 stock index ended dead flat for the year. This reflects how many investors view the economy: recovering so slowly, its growth slope is practically horizontal. The year's volatility was echoed in a 140-point drop Wednesday followed by a 136-point surge the very next day.
The week's positive economic news included the Pending Home Sales gain covered above and initial jobless claims staying below 400,000 for another week. But none of this "good" news was very terrific, so economic emotions were held in check by the usual suspects: European debt worries and corporate underperformers. Sears announced it would close about 100 stores and American Airlines parent AMR Corp., which filed for bankruptcy protection last month, revealed its stock would be delisted from the Big Board.
For the week, the Dow ended down 0.6%, at 12218 but UP 5.5% for the year; the S&P 500 also dipped 0.6%, to 1258 but was unchanged for the year; and the Nasdaq dropped 0.5%, to 2605 and was down 1.8% for the year.
Although it was a low volume week all around, the bond market behaved conventionally, prices heading north as stocks drifted south. The FNMA 3.5% bond we watch ended the week UP .95, at $102.27. According to Freddie Mac's weekly survey, national average fixed mortgage rates inched up from the prior week's record lows. But they're expected to stay in super low territory for awhile.
DID YOU KNOW?...The FOMC Minutes released Tuesday give insight into the decision making process for monetary policy and what the Fed thinks about economic developments inside and outside the U.S.
This Week’s Forecast
MANUFACTURING, SERVICES, FED MINUTES, JOBS...The markets are closed today in observance of New Year's, but the rest of the week is packed with economic data. ISM Manufacturing on Tuesday should remain in expansion territory just like ISM Services on Thursday. Tuesday's FOMC Minutes from the Fed's December 13 meeting may provide useful insight.
But the week's highlight will be Friday's December Jobs report.150,000 Nonfarm Payrolls should be added, which won't do anything to help the Unemployment Rate, expected to creep back up to 8.7%.
>> 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 2 – Jan 6
Date Time (ET) Release For Consensus Prior Impact
Tu Jan 3 10:00 ISM Index Dec 53.4 52.7 HIGH
Tu Jan 3 14:00 FOMC Minutes 12/13 NA NA HIGH
Th Jan 5 08:30 Initial Unemployment Claims 12/31 375K 381K Moderate
Th Jan 5 08:30 Continuing Unemployment Claims 12/24 3.620M 3.601M Moderate
Th Jan 5 09:45 ISM Services Dec 53.0 52.0 Moderate
Th Jan 5 11:00 Crude Inventories 12/31 NA 3.899M Moderate
F Jan 6 08:30 Average Workweek Dec 34.3 34.3 HIGH
F Jan 6 08:30 Hourly Earnings Dec 0.2% -0.1% HIGH
F Jan 6 08:30 Nonfarm Payrolls Dec 150K 120K HIGH
F Jan 6 08:30 Unemployment Rate Dec 8.7% 8.6% HIGH
Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months...The expectation is for the Fed Funds Rate to remain at its rock bottom level 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%–0.25%
After FOMC meeting on: Consensus
Jan 25 0%–0.25%
Mar 13 0%–0.25%
Apr 25 0%–0.25%
Probability of change from current policy:
After FOMC meeting on: Consensus
Jan 25 <1%
Mar 13 <1%
Apr 25 <1%
Monday, December 19, 2011
Market Update --For the week of December 19, 2011
Happy Holidays!
QUOTE OF THE WEEK..."Do what you can with what you have where you are."--Theodore Roosevelt
INFO THAT HITS US WHERE WE LIVE...The famous President's sage advice from a century ago is still the appropriate approach to today's housing market. In the midst of all the media noise, it's always good to check what we do have and where we really are. For example, the Census Bureau reported that although the median sale price of new homes in October was down 15% over the last five years, it's actually up 26% over the last ten. More evidence that housing still is a good investment over the long term.
A recent economic forecast from the National Association of Realtors (NAR) reports existing home sales are expected to grow by 1.2% this year and 5.1% in 2012. And although the median existing home price is predicted to dip about 4% this year, it should recover and go UP 2.6% in 2012. Sales should also jump to 5.22 million units from this year's projected 4.97 million.
BUSINESS TIP OF THE WEEK...Now is a good time to think about setting goals. The key is to make those goals concrete--as specific as you can--with a time frame for when you want to achieve them.
>> Review of Last Week
EURO TRASH...It was another week of European worries trashing stock prices. The Euro Summit the week before failed to come up with the "bazooka" solution investors had been looking for. Then ratings agencies warned of potential further downgrades in the region. All this made Wall Streeters feel quite risk averse, causing them to exit the equity markets, which sent all three major indexes decidedly down for the week.
With our own economy, things weren't so bad. Retail Sales were up for November, though less than expected, but up 6.7% versus a year ago. This wasn't enough to impress the Fed, whose meeting Tuesday made it three years of interest rates at near-zero levels. The economic data isn't great, but it is somewhat improving. Initial weekly jobless claims hit a 43-month low of 366,000. The Empire State and Philadelphia Fed Surveys of manufacturing in those regions were better than expected, although industrial production overall dropped a bit.
For the week, the Dow ended down 2.6%, at 11866; the S&P 500 slipped down 2.8%, to 1220; and the Nasdaq dropped 3.5%, to 2555.
Investors were still nervous about Europe and the Fed's statement didn't say anything to concern traders, so bond prices held up well. The FNMA 3.5% bond we watch ended the week UP .91, at $102.22. This is of course good for interest rates and, once again, Freddie Mac's weekly survey had national average fixed mortgage rates remaining at or near their all-time lows.
DID YOU KNOW?... This week's PCE (Personal Consumption Expenditures) measures inflation by tracking changes in prices. Unlike last week's Consumer Price Index, based on a fixed basket of goods and services, the PCE changes with consumer spending habits.
>> This Week’s Forecast
HOUSING, GDP, INFLATION...The week jams in a bunch of housing market reports and they're mixed. On Tuesday, November Housing Starts and Building Permits should come in down a tad, but November Existing Home Sales are predicted to rise north of five million units. Friday, we'll see November New Home Sales, forecast to edge up to a 313,000 annual rate.
Thursday will feature the Third Estimate for Third Quarter GDP, expected to stay an anemic 2.0%. Friday, Core PCE Prices, the Fed's key measure of inflation, is forecast flat for November, which should make everyone happy. The stock market will be closed next Monday, December 26, in observance of the Christmas holiday.
>> 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 19 – Dec 23
Date Time (ET) Release For Consensus Prior Impact
Tu Dec 20 08:30 Housing Starts Nov 627K 628K Moderate
Tu Dec 20 08:30 Building Permits Nov 633K 653K Moderate
W Dec 21 10:00 Existing Home Sales Nov 5.03M 4.97M Moderate
W Dec 21 10:30 Crude Inventories 12/17 NA -1.932M Moderate
Th Dec 22 08:30 Initial Unemployment Claims 12/17 380K 366K Moderate
Th Dec 22 08:30 Continuing Unemployment Claims 12/10 3.650M 3.603M Moderate
Th Dec 22 08:30 GDP-3rd Estimate Q3 2.0% 2.0% Moderate
Th Dec 22 08:30 GDP Deflator-3rd Estimate Q3 2.5% 2.5% Moderate
Th Dec 22 09:55 Univ. of Michigan Sentiment-Final Dec 68.0 67.7 Moderate
Th Dec 22 10:00 Leading Economic Indicators (LEI) Index Nov 0.3% 0.9% Moderate
F Dec 23 08:30 Durable Goods Orders Nov 2.0% -0.5% Moderate
F Dec 23 08:30 Personal Income Nov 0.2% 0.4% Moderate
F Dec 23 08:30 Personal Spending Nov 0.3% 0.1% HIGH
F Dec 23 08:30 Core PCE Prices Nov 0.1% 0.1% HIGH
F Dec 23 10:00 New Home Sales Nov 313K 307K Moderate
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months...Last week, the Fed kept the Funds Rate unchanged and that's where economists expect it to stay 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%–0.25%
After FOMC meeting on: Consensus
Jan 25 0%–0.25%
Mar 13 0%–0.25%
Apr 25 0%–0.25%
Probability of change from current policy:
After FOMC meeting on: Consensus
Jan 25 <1%
Mar 13 <1%
Apr 25 <1%
Thursday, December 15, 2011
10 Things to Put on Your Holiday Checklist
PLUS...Year-end financial to-do list
The Holidays are upon us. Here's how to stay well organized, so you can enjoy them the most.
1. Do your online shopping first. Order gifts on the internet now, to allow time for shipping, returns and getting them wrapped.
2. How are you fixed for glassware? The holidays often feature bigger entertaining. Make sure you have enough glasses and dishes for parties and meals.
3. Do your holiday meal menus. Decide what you'll be cooking and what others will bring. Make up a master grocery list for your centerpiece dish.
4. Do your nonperishable shopping. Get in all canned goods, pantry staples and bottled beverages.
5. Clean the house. Keeping the house neat makes decorations stand out. And clean out the refrigerator to make room for those big holiday dishes.
6. Got kids? Get batteries! Make sure you have them on hand in all the right sizes.
7. Shop for your fresh foods. Get these ingredients two or three days before you'll need them.
8. Set the table ahead of time. That way you can concentrate on the food prep the day of the feast.
9. Don't forget fresh flowers. Get them two days before to give blooms time to open up.
10. Charge camera and video batteries. Charge spare batteries too, if you have them.
Now you're ready to relax and enjoy family and friends!
YOUR END-OF-THE-YEAR FINANCIAL CHECK-UPS
Now is the right time to take a look at a few financial matters:
1. Review health and dental care choices. Many employers allow you to make changes to your benefit plans now. Check with doctors and dentists to make sure they're still in your plan's preferred provider network and that your family has adequate coverage.
2. Review use-or-lose accounts. Pretax Flexible Spending Accounts (FSAs) are set up this way. Review your plan to see if you have some spending to do, or if your employer offers a grace period. Even then, make sure 2011 expenses are still allowed in 2012.
3. Review your withholding. Check the withholding calculator at the IRS website. If you haven't been withholding enough to cover your taxes, you might want to increase the amount. Under-withholding can result in penalties.
4. Get ready for 2011 taxes. Check last year's returns to see who needs to send you what tax documents, and by when. Make a list and follow up if anyone holds you up at the beginning of the year. Also, check last year's return for itemized deductions. See if you should make deductible purchases now or wait until 2012.
Note: Be sure to consult with a tax professional before making any decisions related to your tax situation.
5. Set your 2012 financial goals. Now is the time to write down what you'd like to achieve financially next year. Save money for a down payment on a new house? Start a college fund for your kids? Put more into your retirement fund?
Remember, we're always here to answer any questions.... Have a great day!
PS With today's extremely low mortgage rates and home prices more affordable than ever, many people are upsizing, downsizing or refinancing. Please call or email us now to discuss your situation.
Monday, November 28, 2011
Market Update For the week of November 28, 2011
QUOTE OF THE WEEK..."One who is a master of patience is master of everything else."--George Savile (1633–1695), English statesman, writer and politician
INFO THAT HITS US WHERE WE LIVE...The patient approach advocated by the 1st Marquess of Halifax is proving to be the right tactic for mastering today's housing market. Last week, October Existing Home Sales inched up to an annual rate just under 5 million units. And although things appear to be improving only slowly, existing home sales are actually UP 13.5% from a year ago.
Even better, the months' supply of existing homes fell to 8.0 and inventory is now down 13.8% versus a year ago. The naysayers jumped on the fact that the median price was also down. But a large portion of October sales came from distressed properties whose prices are heavily discounted. Although some see this as a negative, it's what's needed for inventories to be worked down and for the housing market to recover.
BUSINESS TIP OF THE WEEK...Planning is important but stay flexible. The unexpected often happens in business and flexibility keeps you open to the creative thinking needed to succeed.
>> Review of Last Week
NO THANKS... People feel positive around Thanksgiving, but folks on Wall Street spent the week in a decidedly negative mood. They were put there at the start by Congressional leaders who couldn't get past partisan politics to deal with our nation's fiscal issues. Then Moody's fed the down vibe with cautious comments about France's debt rating outlook. A third bummer came with Tuesday's downward revision to Q3 GDP, coming in at a measly 2.0%. The net result? The worst ever Thanksgiving week for stocks.
There really were some things to be thankful for. The Q3 GDP report showed business investment growing at its fastest pace this year. Chain store sales were UP 3.7% over last year by one study and UP 2.8% by another. Incomes grew in October more than predicted, although spending grew less. Initial jobless claims stayed below 400,000. Finally, October Durable Goods orders were down slightly for the month, but if you take out volatile transportation, they are UP 11.7% from a year ago.
For the week, the Dow ended down 4.8%, at 11232; the S&P 500 went down 4.7%, to 1159; and the Nasdaq sank 5.1%, to 2442.
With stocks having such an awful week, you'd expect bonds to benefit immensely. Not so this time. With volumes down as usual on Black Friday's shortened trading day, bond performance was mixed. The FNMA 3.5% bond we watch ended the week down .02, at $101.20. National average mortgage rates remained at or near record lows for the fourth week in a row, according to Freddie Mac's weekly survey.
DID YOU KNOW?... The 1792 Buttonwood Agreement created the New York Stock Exchange. It was signed by 24 stockbrokers under a buttonwood tree outside 86 Wall Street.
>> This Week’s Forecast
NEW HOME SALES, PENDING HOME SALES, JOBS... Of great interest this week will be more housing market reports and the jobs numbers that are key to the real estate recovery. October New Home Sales are expected to hold steady, above the 300,000 level. September Pending Home Sales, indicating Existing Home Sales a few months out, look to be up a tad.
Friday, we get the November Employment Report. Although payrolls should rise, the number of new jobs is still not enough to bring down the unemployment rate.
>> 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 28 – Dec 2
Date Time (ET) Release For Consensus Prior Impact
M
Nov 28 10:00 New Home Sales Oct 312K 313K Moderate
Tu
Nov 29 10:00 Consumer Confidence Nov 43.0 39.8 Moderate
W
Nov 30 08:30 Productivity-Rev. Q3 2.6% 3.1% Moderate
W
Nov 30 09:45 Chicago PMI Nov 57.5 58.4 HIGH
W
Nov 30 10:00 Pending Home Sales Sep 0.1% -4.6% Moderate
W
Nov 30 10:30 Crude Inventories 11/26 NA -6.219M Moderate
W
Nov 30 14:00 Fed Beige Book Nov NA NA Moderate
Th
Dec 1 08:30 Initial Unemployment Claims 11/26 390K 393K Moderate
Th
Dec 1 08:30 Continuing Unemployment Claims 11/19 3.650M 3.691M Moderate
Th
Dec 1 10:00 ISM Index Nov 51.0 50.8 HIGH
F
Dec 2 08:30 Average Workweek Nov 34.3 34.3 HIGH
F
Dec 2 08:30 Hourly Earnings Nov 0.2% 0.2% HIGH
F
Dec 2 08:30 Nonfarm Payrolls Nov 118K 80K HIGH
F
Dec 2 08:30 Unemployment Rate Nov 9.0% 9.0% HIGH
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months...The Fed says it wants to keep the Funds rate where it is through mid-2013 and economists expect that they will. 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 13 0%–0.25%
Jan 25 0%–0.25%
Mar 13 0%–0.25%
Probability of change from current policy:
After FOMC meeting on: Consensus
Dec 13 <1%
Jan 25 <1%
Mar 13 <1%
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