| | For the week of June 20, 2011 – Vol. 9, Issue 25
| >> Market Update QUOTE OF THE WEEK..."Don't look back. Something might be gaining on you."--Satchel Paige, Hall of Fame pitcher who last played at age 59
INFO THAT HITS US WHERE WE LIVE... What was gaining on us last week were May Housing Starts, up 3.5% for the month to a higher-than-expected 560,000 unit annual rate. The gain included a 29% increase in multi-family starts, which are now up 17.5% over a year ago. New building permits were also up in May, by 8.7%, to a 612,000 annual rate. Permits indicate the level of starts a short time out, so some economists see the beginning of an upward trend. With the number of homes under construction at the lowest levels on record back to 1970, and as inventories continue to come down, home building will certainly need to grow considerably. Experts are now saying we'll need to find homes for 150 million more people, the projected growth of the U.S. population in the next 30 to 40 years. This will spur a ramp up in home building and sales once the housing recovery gets going. On our way to that recovery, the Mortgage Bankers Association (MBA) reported purchase loan demand up a seasonally adjusted 4.5% from the week before and up 6.1% over a year ago! But wise buyers should act now, as MBA economists expect 30-year fixed-rate mortgage rates to rise a bit by the end of the year and in 2012.
BUSINESS TIP OF THE WEEK...Logic can be your most powerful sales tool. If a cost saving is in your favor, hammer it home. Savings on overall costs, financing rates and energy use make even more logical sense when projected out for several years.
>> Review of Last Week BARELY UP... After six down weeks, the Dow and the S&P 500 stock indexes finally showed weekly gains, although the S&P was up a mere half point. The tech-heavy Nasdaq was still off a tick for the week, dragged down by the makers of BlackBerry, whose stock dropped mightily on earnings that fell well short of Street expectations. Economic reports came in mixed. Inflation continues to be a worry to all but the Fed, as the Consumer Price Index (CPI) for May was up 0.2%. In case you think that's just from higher food and gas prices, the Core CPI, which excludes those, was up 0.3%. We'll see what the Fed says this week.
May Retail Sales were down a less-than-expected 0.2% but are up 7.7% from a year ago. New weekly jobless claims dropped by 16,000 to 414,000, while continuing claims fell by 21,000, to 3.68 million. These moves are in the right direction, although economists feel they aren't large enough. On the manufacturing front, both the Philadelphia and New York regions showed a contraction of activity. But some observers put this to supply-chain disruptions from Japan and expect manufacturing to rebound soon. Overall Industrial Production rose in May, though less than expected. For the week, the Dow ended up 0.4%, at 12,004; the S&P 500 was up a half point, to 1,272; and the Nasdaq was down 1.0%, to 2,616. With continued fears about Greek sovereign debt, you'd think bonds would have benefited from a flight to safety. But the FNMA 4.0% bond we watch ended the week up just .01, closing at $100.25. In Freddie Mac's weekly survey, national average rates for conforming mortgages finally leveled off after dropping eight weeks in a row. Rates are still at or near their lows for the year. DID YOU KNOW?...We spend more time in the bedroom than in any other room in the house, because that's where we sleep. But most of us say the kitchen is our most important room, since it's the center of more activities.
>> This Week’s Forecast MAY HOME SALES AND THE FED...What more could you want? Tuesday's Existing Home Sales and Thursday's New Home Sales will show us if May's closings pushed the annual sales rate up or down. Unfortunately, down is forecast, although surprises are always possible. Wednesday we get the Fed's pronouncement on the Funds Rate and the state of the economy. No one expects the rate to budge, since Fed Chairman Bernanke keeps saying it needs to remain at its rock bottom level for an "extended period." But it will be useful to examine the Fed's policy statement for their take on inflation and the pace of the recovery.
>> 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 June 20 – June 24 | Date | Time (ET) | Release | For | Consensus | Prior | Impact | Tu
Jun 21 | 10:00 | Existing Home Sales | May | 4.78M | 5.05M | Moderate | W
Jun 22 | 10:30 | Crude Inventories | 6/18 | NA | -3.406M | Moderate | W
Jun 22 | 14:15 | FOMC Rate Decision | 6/22 | 0%-0.25% | 0%-0.25% | HIGH | Th
Jun 23 | 08:30 | Initial Unemployment Claims | 6/18 | 418K | 414K | Moderate | Th
Jun 23 | 08:30 | Continuing Unemployment Claims | 6/11 | 3.680M | 3.675M | Moderate | Th
Jun 23 | 10:00 | New Home Sales | May | 305K | 323K | Moderate | F
Jun 24 | 08:30 | GDP - Third Estimate | Q1 | 1.8% | 1.8% | Moderate | F
Jun 24 | 08:30 | GDP Deflator - Third Estimate | Q1 | 1.9% | 1.9% | Moderate | F
Jun 24 | 08:30 | Durable Goods Orders | May | 1.0% | -3.6% | Moderate |
>> Federal Reserve Watch Forecasting Federal Reserve policy changes in coming months... Given Fed Chairman Bernanke's continued pronouncements, economists do not expect a hike in the Funds Rate any time soon. 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 | | Jun 22 | 0%–0.25% | | Aug 9 | 0%–0.25% | | Sep 20 | 0%–0.25% |
Probability of change from current policy: | After FOMC meeting on: | Consensus | | Jun 22 | <1% | | Aug 9 | <1% | | Sep 20 | <1% | | | Dce | | | This e-mail is an advertisement for Denise Elvir. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice, or a commitment to lend. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in the newsletter is the property of PrimeLending, A PlainsCapital Company and cannot be reproduced for any use without prior written consent. It is designed for real estate and other financial professionals only. It is not intended for consumer distribution. The material does not represent the opinion of PrimeLending, A PlainsCapital Company. Š 2011 PrimeLending, A PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, A PlainsCapital Company (NMLS no: 13649) is a wholly-owned subsidiary of a state-chartered bank and is an exempt lender in the following states: AK, AR, CO, DE, FL, GA, HI, ID, IA, KS, KY, LA, MN, MS, MO, MT, NE, NV, NY, NC, OH, OK, OR, PA, SC, SD, TN, TX, UT, VA, WV, WI, WY. Licensed by: AL State Banking Dept.- consumer credit lic no. MC21004; AZ Dept. of Financial Institutions- mortgage banker lic no. BK 0907334; Licensed by the Department of Corporations under the California Residential Mortgage Lending Act- lender lic no. 4130996; CT Dept. of Banking- lender lic no. ML-13649; D.C. Dept. of Insurance, Securities and Banking- dual authority lic no. MLO13649; IL Dept. of Financial and Professional Regulation- lender lic no. MB.6760635; IN Dept. of Financial Institutions- sub lien lender lic no. 11169; ME Dept. of Professional & Financial Regulation- supervised lender lic no. SLM8285; MD Dept. of Labor, Licensing & Regulation- lender lic no. 11058; Massachusetts Division of Banking– lender & broker license nos. MC5404, MC5406, MC5414, MC5450, MC5405; MI Dept. of Labor & Economic Growth- broker/lender lic nos. FR 0010163 and SR 0012527; Licensed by the New Hampshire Banking Department- lender lic no. 14553-MB; NJ Dept. of Banking and Insurance-lender lic no. 0803658; NM Regulation and Licensing Dept. Financial Institutions Division- lender license no. 01890; ND Dept. of Financial Institutions- money broker lic no. MB101786; RI Division of Banking- lender lic no. 20102678LL and broker lic no. 20102677LB; TX OCCC Reg. Loan License- lic no. 7293; VT Dept. of Banking, Insurance, Securities and Health Care Administration- lender lic no. 6127 and broker lic no. 0964MB; WA Dept. of Financial Institutions-consumer lender lic no. 520-CL-49075. PrimeLending, A PlainsCapital Company is an Equal Housing Opportunity Lender. NMLS# 177444
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