>> Market Update QUOTE OF THE WEEK... "It ain't over 'til it's over." --In memoriam, Lawrence Peter "Yogi" Berra (1925-2015), American baseball great
INFO THAT HITS US WHERE WE LIVE... Sadly, Yogi's time with us is now over, but beyond the baseball memories he leaves are his humorous, often wise, "Yogi-isms." The one quoted here is a pithy comment on why persistence makes sense. And persistence makes perfect sense if we're going to weather the twists and turns of today's housing market. August, for example, gave us Existing Home Sales twisting down 4.8%, while New Home Sales turned solidly up. But a closer look at the data shows existing home sales are still up 6.2% over a year ago and came in at a decent 5.31 million unit annual rate. Plus, the August dip follows three months in a row of sales gains.
It was also nice to see that non-cash existing home sales, where the buyer takes out a mortgage, are up 7.6% versus a year ago. The main sales problem seems to be tight inventories, but with the median price of an existing home up 4.7% from a year ago, more sellers should be enticed onto the market. Meanwhile,New Home Sales were up 5.7% in August, hitting a 552,000 unit annual rate. In fact, last monthAmericans bought new homes at the fastest pace in 7 years. Finally, the FHFA index of prices for homes financed with conforming mortgages was up 0.6% in July and is 5.8% ahead of a year ago. The upward trend in housing is clearly telling us, "It ain't over."
BUSINESS TIP OF THE WEEK... Schedule meeting time with yourself for the tasks you need to accomplish. Then silence your phone, close your email program, work away from your desk if you need to.This guarantees you distraction-free blocks of time.
>> Review of Last WeekECONOMY BETTER, STOCKS WORSE... A weird week on Wall Street, as investors saw signs the economy is improving, yet sold off stocks heavily, sending all three market indexes south for the week. Equities have headed in that direction ever since the Fed left the key borrowing rate unchanged at its September 17 confab. Investors interpreted that as the central bank's concern for a still anemic economy.But last Thursday, just a week later, Fed Chair Janet Yellen said an interest rate hike is likely before year end, since "prospects for the U.S. economy generally appear solid." She even claimed signs of weak global growth, a worry the week before, won't have significant impact.
Some of the economic data indeed supported her confident new views. The GDP - Third Estimate showed the economy grew in the second quarter at an upwardly revised 3.9% annual rate. The final September read of the Michigan Consumer Sentiment Index also came in higher than expected, although down from August. Housing market news was up and down too, as mentioned above. Then a 2% dip in August Durable Goods Orders put another fly in the economic healing ointment. But hold on. Initial Unemployment Claims registered yet another week under the 300,000 threshold, while Continuing Unemployment Claims rested at a reasonable 2.242 million.
The week ended with the Dow down 0.4%, to 16315; the S&P 500 down 1.4%, to 19531; and the Nasdaq down 2.9%, to 4687.
Yellen's rate hike talk, along with the stronger GDP growth, sent bond prices down. The 30YR FNMA 4.0% bond we watch finished the week down .07, at $106.13. National average fixed mortgage rates moved lower in Freddie Mac's Primary Mortgage Market Survey for the week ending September 24. The reason? The Fed's decision NOT to hike rates at the prior week's meeting. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.
DID YOU KNOW?...A real estate data company reports that 1,947,028 single-family homes and condos sold through August, up 5.4% from a year ago, and the highest total for the first eight months of the year since 2007.
>> This Week’s ForecastINFLATION TAME, PENDING HOME SALES OK, JOBS UP... Fed Chair Janet Yellen said to start raising rates, their inflation target is 2% as measured by PCE Prices. For August, that measure is forecast at 0.1%, so rates should stay down a while longer. Pending Home Sales are predicted to show continued slow growth in contracts signed on existing homes. As always, Friday's jobs report will get the most attention, with new Nonfarm Payrolls expected to come in around 200,000 in September, theUnemployment Rate holding at 5.1%.>> The Week’s Economic Indicator CalendarWeaker 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 Sep 28 – Oct 2
| Date ||Time (ET) ||Release ||For ||Consensus ||Prior ||Impact |
|08:30 ||Personal Income ||Aug ||0.4% ||0.4% ||Moderate |
|08:30 ||Personal Spending ||Aug ||0.3% ||0.3% ||HIGH |
|08:30 ||PCE Prices - Core ||Aug ||0.1% ||0.1% ||HIGH |
|10:00 ||Pending Home Sales ||Aug ||0.5% ||0.5% ||Moderate |
|10:00 ||Consumer Confidence ||Sep ||96.0 ||101.5 ||Moderate |
|09:45 ||Chicago PMI ||Sep ||52.7 ||54.4 ||HIGH |
|10:30 ||Crude Inventories ||9/26 ||NA ||-1.925M ||Moderate |
|08:30 ||Initial Unemployment Claims ||9/26 ||270K ||267K ||Moderate |
|08:30 ||Continuing Unemployment Claims ||9/19 ||2.248M ||2.242M ||Moderate |
|10:00 ||ISM Index ||Sep ||50.6 ||51.1 ||HIGH |
|08:30 ||Average Workweek ||Sep ||34.6 ||34.6 ||HIGH |
|08:30 ||Hourly Earnings ||Sep ||0.2% ||0.3% ||HIGH |
|08:30 ||Nonfarm Payrolls ||Sep ||205K ||173K ||HIGH |
|08:30 ||Unemployment Rate ||Sep ||5.1% ||5.1% ||HIGH |
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months... Despite the Fed Chair's recent comments, most economists do not expect the Fed to hike rates before its January meeting. Note: In the lower chart, an 11% probability of change is an 89% certainty the rate will stay the same.
Current Fed Funds Rate: 0%–0.25%
|After FOMC meeting on: ||Consensus |
|Oct 28 ||0.00%-0.25% |
|Dec 16 ||0.00%-0.25% |
|Jan 27 ||0.00%-0.25% |
Probability of change from current policy:
|After FOMC meeting on: ||Consensus |
|Oct 28 || 11% |
|Dec 16 || 39% |
|Jan 27 |