Tuesday, April 23, 2013

Market Update ...

For the week of April 22, 2013 – Vol. 11, Issue 16 >> Market Update INFO THAT HITS US WHERE WE LIVE... Last week Housing Starts were reported UP 7.0% for March to a 1.036 million unit annual rate, 46.7% higher than a year ago and the highest they've been since 2008. But wait. The boost was all due to multi-family units, up 31.1% for the month. Single-family starts were down 4.8%, although they actually are UP a very healthy 28.7% from a year ago. Analysts tell us the multi-family sector is super volatile from month to month, but they expect large gains for home building overall for at least two years. Building Permits in March were down a bit, to a 902,000 annual rate, but almost all the drop was due to multi-families. Single-family permits slipped just 0.5% for the month and are now UP 27.7% versus a year ago. The National Association of Home Builders (NAHB) confidence index went to 42 from 44 in March. But get this. The NAHB index for future single-family sales rose from 50 to 53, a very positive sign. Economists say it's OK in a recovery to see up and down indicators along the way, as long as the underlying trend is upward, which it is now in housing. BUSINESS TIP OF THE WEEK... Focus. Set goals, make decisions, get organized. Don't just watch life happen; take control of your destiny. As Yogi Berra said: "If you don't know where you are going, you'll wind up somewhere else." >> Review of Last Week DOWN... It was a volatile week on Wall Street, with corporate earnings , economic data, commodities, and global growth worries keeping investors on edge. When all was said and done, it was no surprise that the three major stock indexes closed markedly down for the week. Q1 corporate earnings were a mixed bag, with IBM missing forecasts and Microsoft beating them. General Electric's profits were in line with projections, but McDonald's missed. Google happily reported a double-digit increase in net revenue from its core Internet business. Economic data was also mixed. The New York Empire and Philadelphia Fed manufacturing indexes both missed estimates, indicating slowing activity in those regions. The NAHB Housing Market index and March Building Permits also came in lower than expected. But Industrial Production and Housing Starts both pushed past forecasts, clearly positive signs for factories and home builders. Yet crude oil and gold futures were hammered and global growth concerns returned, as China's Q1 GDP rose at a 7.7% annual rate when 8.0% was expected. The week ended with the Dow down 2.1%, to 14548; the S&P 500 also down 2.1%, to 1555; and the Nasdaq down 2.7%, to 3206. Atypically, the heavy selling in stocks did not spur a flight to safety to bonds, which ended the week little changed. The FNMA 3.5% bond we watch ended the week up .01, at $106.09. After the prior week's soft retail and consumer sentiment numbers, national average mortgage rates edged lower for the third week in a row. The Mortgage Bankers Association put purchase loan applications at their highest level since May 2010, up 4% for the week and up 20% versus a year ago. DID YOU KNOW?... GDP, Gross Domestic Product, is the total value of all goods and services produced in a country in a year. It equals total consumer, investment, and government spending, plus the value of exports, minus the value of imports. >> This Week’s Forecast HOME SALES SOLID, DURABLE GOODS SINK, GDP SOARS... The week should begin with solid home sales numbers for March, the annual rate of Existing Home Sales surpassing the 5M threshold and New Home Sales moving ahead nicely. But as usual, any excitement will be tempered. In this case, Durable Goods Orders for March are expected to slide 3.1%. In spite of this, the first Advanced Q1 GDP reading is forecast to show economic growth proceeding at an encouraging 2.8% annual rate. This is good news following the negative to anemic GDP growth numbers we saw for Q4. >> 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 Apr 22 – Apr 26 Date Time (ET) Release For Consensus Prior Impact M Apr 22 10:00 Existing Home Sales Mar 5.01M 4.98M Moderate Tu Apr 23 10:00 New Home Sales Mar 415K 411K Moderate W Apr 24 08:30 Durable Goods Orders Mar –3.1% 5.6% Moderate W Apr 24 10:30 Crude Inventories 4/20 NA –1.233M Moderate Th Apr 25 08:30 Initial Unemployment Claims 4/20 351K 352K Moderate Th Apr 25 08:30 Continuing Unemployment Claims 4/13 3.060M 3.068M Moderate F Apr 26 08:30 GDP–Advanced Q1 2.8% 0.4% Moderate F Apr 26 08:30 GDP Chain Deflator–Adv. Q1 1.6% 1.0% Moderate F Apr 26 09:55 Univ. of Michigan Consumer Sentiment–Final Apr 72.4 72.3 Moderate >> Federal Reserve Watch Forecasting Federal Reserve policy changes in coming months... Last Thursday Minneapolis Fed president Narayana Kocherlakota said financial market conditions requiring the Fed to keep rates super low may persist for 5 to 10 years. More cause for economists to expect no change in the Funds Rate. 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 May 1 0%–0.25% Jun 19 0%–0.25% Jul 31 0%–0.25% Probability of change from current policy: After FOMC meeting on: Consensus May 1 <1% Jun 19 <1% Jul 31 <1% Lisa Ekanger Your Hometown Realtor!

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