After many weeks of trying to pull good news out of dismal economic reports, this week has been far more positive and the economy is showing clear signs of recovery. The government this week raised the Federal Discount Rate unexpectedly by .25% which is probably the greatest indicator that things are improving economically. The government wants to return to what would be considered standard economic policy versus the "crisis policy" that we have seen for over 2 years.
Housing has shown positive signs with two significant reports announced this week:'
• Housing Starts rose 2.8% which was more than expected
• Building Permits declined by 4.9% however most of the decline was related to a multi-family drop. Single family permits increased by .4%
In addition to the housing reports, there were a number of other reports which have suggested that the economy is getting stronger. The positive reports are a long needed respite from the barrage of negative news we have been hearing about in the economy and global markets for the last few weeks.
The Manufacturing Index rose more than expected indicating that the cost of production is on the rise. This month's report was also the 6th straight month of production gains which is indicative that consumers are starting to make purchases again.
The Producer Price Index rose 1.4% from December however when you subtract volatile food and energy prices, the core PPI was only .3% The Consumer Price Index rose 2.6% percent however once again when you factor out volatile retail energy prices, especially gasoline prices at the pump, the core CPI only increased .2% which was less than forecast. At the present time inflation still appears to be subdued and is a not a currently a major economic concern.
The stock market has been reacting positive to the economic news as of late and has been rallying for most of the week recovering many of the losses incurred from last week. In addition to the positive economic news being announced in the U.S., concerns over the European and Asian debt crisis have been easing as well.
With the economy remaining on fragile ground, the positive economic reports are welcome to many. The signs are starting to emerge that we are headed in the right direction and let us remain optimistic that the positive indicators of economic recovery will continue.
Economic news that can move the markets on tap for next week is:
• Monday February 22nd - Ben Bernake Speaks about Employment Growth
• Tuesday February 23rd - Case-Shiller House Value Index and Consumer Confidence Reports
• Wednesday February 24th - New Home Sales
• Thursday February 25th - Durable Goods Orders and Weekly Jobless Claims
• Friday February 26th - GDP, Consumer Sentiment and Existing Home Sales
**Special Note: The government will be holding bond auctions throughout the week. The appetite for bonds by investors can have a significant impact on mortgage rates.
Friday, February 19, 2010
Friday, February 12, 2010
Weekend Update - February 12, 2010
This week presented many challenges to the market but when you dig deeper into the headlines and actually read the stories behind them, you will see that there is certainly signs of economic improvement, especially in the housing market.
It was reported that home prices declined 12% in 2009 from the previous year. This is not earth shattering news as anyone keeping any type of eye on real estate would not be surprised by this report.
Although a decline in values is usually not looked upon as favorable, the reality is that the drop of 12% is the smallest drop in 2 years. In addition, for a good part of 2009 we saw increases in average home prices, it was the 4th quarter in which housing prices dropped but the trend is not expected to continue.
Home sales in 2009 increased 27.2% from the prior year which is having an impact on housing inventories. Although a good portion of the increase is related to the purchase of foreclosures and short sales, none the less, the increase in home sales is starting to take a bite out of the excessive inventory on the market. We all know that the reduction of inventory is one of the key ingredients to house price stabilization.
Banks are also starting to get more creative in working with homeowners in trouble. Citibank announced a new program which will give homeowners that are being foreclosed on the opportunity to remain in the house for up to 6 months after foreclosure.
Mortgage rates had ticked up about 1/8th of percent earlier in the week due the positive home sales report. However, the continuing concern regarding the European markets has once again made treasuries the safe haven for investors. The 10YR Bond has dropped back to within 4 basis points of where it started the week.
In other economic news:
Retail sales for January rose .5% which was higher than expected. Many are hopeful that this slight increase is a sign that consumers are beginning to spend money on other things besides necessities.
Weekly Jobless Claims dropped more than expected. Although you cannot judge the employment trend by one week, it was nice to hear a lower than expected number for a change.
European financial concerns are still weighing on the U.S. stock market which was evident in the week of volatile trading. The stock market will finish the week about the same place it started.
Economic news that can move the markets on tap for next week is:
• Tuesday February 16th - Housing Market Index
• Wednesday February 17th - Housing Starts
• Thursday February 18th - Producer Price Index, Jobless Claims & Industrial Production
• Friday February 19th - Consumer Price Index
Have a good weekend!
JJ Mack!
It was reported that home prices declined 12% in 2009 from the previous year. This is not earth shattering news as anyone keeping any type of eye on real estate would not be surprised by this report.
Although a decline in values is usually not looked upon as favorable, the reality is that the drop of 12% is the smallest drop in 2 years. In addition, for a good part of 2009 we saw increases in average home prices, it was the 4th quarter in which housing prices dropped but the trend is not expected to continue.
Home sales in 2009 increased 27.2% from the prior year which is having an impact on housing inventories. Although a good portion of the increase is related to the purchase of foreclosures and short sales, none the less, the increase in home sales is starting to take a bite out of the excessive inventory on the market. We all know that the reduction of inventory is one of the key ingredients to house price stabilization.
Banks are also starting to get more creative in working with homeowners in trouble. Citibank announced a new program which will give homeowners that are being foreclosed on the opportunity to remain in the house for up to 6 months after foreclosure.
Mortgage rates had ticked up about 1/8th of percent earlier in the week due the positive home sales report. However, the continuing concern regarding the European markets has once again made treasuries the safe haven for investors. The 10YR Bond has dropped back to within 4 basis points of where it started the week.
In other economic news:
Retail sales for January rose .5% which was higher than expected. Many are hopeful that this slight increase is a sign that consumers are beginning to spend money on other things besides necessities.
Weekly Jobless Claims dropped more than expected. Although you cannot judge the employment trend by one week, it was nice to hear a lower than expected number for a change.
European financial concerns are still weighing on the U.S. stock market which was evident in the week of volatile trading. The stock market will finish the week about the same place it started.
Economic news that can move the markets on tap for next week is:
• Tuesday February 16th - Housing Market Index
• Wednesday February 17th - Housing Starts
• Thursday February 18th - Producer Price Index, Jobless Claims & Industrial Production
• Friday February 19th - Consumer Price Index
Have a good weekend!
JJ Mack!
Saturday, February 6, 2010
Weekend Blog - February 6, 2010
The U.S. economy is showing signs of stabilization however influence from the global economy is weighing on the U.S. markets. Asia and Europe markets have taken it on the chin this week over the debt crisis that is coming to bear in Portugal, Spain and Greece. In a global economy what happens elsewhere in the world must have an impact on us. The positive side is that although the U.S. stock market has also been impacted, we have witnessed movement of investment into the safe haven of government treasuries which has dropped mortgage rates approximately 1/8%.
National unemployment has dropped to 9.7% which was far better than analyst expectations of 10%. Although in recent weeks we have seen an increase in weekly first time jobless claims, the news of lower overall unemployment is a positive report that the economy sorely needs.
Finally big corporations are seeing an increase in sales growth. Up until now, the increases in corporate profits has been due to cost cutting measures. For the first time in over 2 years, companies are beginning to see increases in sales. Although most of the increase has occurred overseas, never the less, the news is positive and ultimately we will see the sales growth move over to the U.S.
Remember in the end, life is filled with choices. It is your decision to focus on positive or negative news and forces all around. Make the decision to be positive! Don't wait for positive news to happen to feel better, make your own news positive through your focus and actions.
Economic news week on tap for next week is:
• Thursday February 11th - Retail Sales
• Thursday February 11th - Jobless Claims
• Friday February 12th - Consumer Sentiment
Have a good weekend!
JJ Mack
National unemployment has dropped to 9.7% which was far better than analyst expectations of 10%. Although in recent weeks we have seen an increase in weekly first time jobless claims, the news of lower overall unemployment is a positive report that the economy sorely needs.
Finally big corporations are seeing an increase in sales growth. Up until now, the increases in corporate profits has been due to cost cutting measures. For the first time in over 2 years, companies are beginning to see increases in sales. Although most of the increase has occurred overseas, never the less, the news is positive and ultimately we will see the sales growth move over to the U.S.
Remember in the end, life is filled with choices. It is your decision to focus on positive or negative news and forces all around. Make the decision to be positive! Don't wait for positive news to happen to feel better, make your own news positive through your focus and actions.
Economic news week on tap for next week is:
• Thursday February 11th - Retail Sales
• Thursday February 11th - Jobless Claims
• Friday February 12th - Consumer Sentiment
Have a good weekend!
JJ Mack
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