Well the week was a data junkies dream. We had tons of economic reports come out, and in the end, mortgage rates continued to decline. The stock market had about a 350 point drop in total for the week as of the writing of this report however the main reason is for concern in Europe.
It has been a while, but I feel today it is necessary for me to put my sarcasm hat on and report the week's happenings strictly for entertainment purposes. If I take the reports to seriously I may go postal. (I will have to go beyond a one page report - sorry). I just need to vent about the nonsense that is being reported by the government. Please understand nothing I write is a political statement, it is strictly about government nonsense and their belief that we are dumb enough to fall for their propoganda.)
As you may already know, The Wall Street Reform Bill is a done deal. The President is expected to sign it into law by July 4th. Exactly when everything will take effect, is uncertain. However what is for sure is that this legislation is one of the most powerful and largest changes to laws and controls ever executed by the government. I believe the Constitution, The Bill of Rights and The Declaration of Independence are still more powerful. However I believe Barney Franks wants to change that also. As far as our rights in business, if you work in the financial industry, bottom line is that you don't have many of them anymore with this reform bill.
I was speaking with a friend yesterday and we discussed the definitions of Democracy, Socialism and Communism.
• Democracy: Freedom of choice and the opportunity for the people of the country to be able to engage in making decisions on their own with minimal government intervention.
• Socialism: You still have the right to choose, however your choices must adhere to government rules that eliminate virtually every choice except for those the government wants you to make.
• Communism: You are not allowed to think for yourself or choose.
The Wall Street Reform Bill now places the business sector of the country somewhere between Socialism and Communism. Depending on which industry you look at, your view may vary. Buckle up my friends, the cost of doing business in this country has just been increased significantly and our liberties of freedom of choice in business are being taken away.
Ok I'm done - now on to the main report:
The housing news reported this week was dismal however not unexpected. I have been writing for weeks about the end of the tax credit and how it will impact May housing numbers. Well here they are:
• New Homes Sales Plunge 33% (largest drop ever measured since 1963)
• Existing Home Sales Drop 2%. Over 30% of these homes sold are foreclosures and shorts sales.
• March and April's New Home Sales Report was revised downward by 108,000 units making those months much worse than reported previously. Remember, the tax credit was active during that period of time which is now increasing concerns about housing.
• Single family home starts drop 17%
• MBA Purchase Applications dropped 1.2% and Refinances dropped 7.3%.
• Housing supply inventory increased from 5.8 months in April to 8.5 months in May (This does not includes the 3,650,000 homes that the nation's major banks are currently holding off the market to stabilize values. In case you think I made a mistake with the zero's, I wrote 3 million six hundred and fifty thousand homes not being sold by the banks)
As positively natured a person I am, I truly don't enjoy writing about all of the bad news - I really don't. However, I am a little bit disgusted in how are government is perpetuating so many lies to us about the state of the economy just so they can say we are not going to have a double dip recession. Actually they are right, we are not going to have a double dip because the first recession never ended!
The FOMC stated that economy is "proceeding". (What does that mean?)
Of course the economy is "proceeding"! - As long as there IS an economy, it has to "proceed"! - I failed economics in college but even I know an economy has to proceed.
Sorry I digressed - The FOMC has continued to keep interest rates at or near zero with no expectation of when they will need to raise them. Inflation continues to be a non-factor so the concern for rate increases does not exist.
Jobless claims dropped 19,000 last week, however the previous weeks jobless claims were revised upward by 4,000. Overall first time jobless claims remain somewhat stable with only a slight rise in the 4 week moving average.
What is supposed to be good news is that 45,000 people came off of the unemployment rolls last week. The only question that nobody in government will answer is did they get jobs? - or did they give up on finding a job - or are they no longer eligible for unemployment?
GET THIS - The Obama Administration stated that they are responsible for the 45.9% increase in national corporate profits that took place over the last 12 months. Wow- I thought that firing employees and cutting expenses is what increased profits during this period of time. I say that because unless sales increase, which they haven't, the only way for corporate profits to increase is by cutting costs. Like I said earlier, I failed economics in college but.... Am I missing something?
The great news for the week is that mortgage rates are at the lowest point on record. 30 year fixed rates are in the 4's and I am cautiously optimistic that this will increase activity in home buying and refinances. The government is currently considering extending the tax credit however that has not been decided as of yet.
Once again I apologize for the tone of this newsletter. It is not like me to do this, however I now feel cleansed and I can go and enjoy my weekend knowing that I have bestowed my frustration on my loyal readers.
News on tap for next week:
• Tuesday June 29th - Case-Shiller Housing Value Index
• Tuesday June 29th - Consumer Confidence
• Wednesday June 30th - MBA Purchase Applications, ADP Employment Report
• Thursday July 1st - Pending Home Sale, Weekly Jobless Claims
Your Mortgage Professional,
JJ Mack
916-517-1800
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