QUOTE OF THE WEEK…“What is past is prologue.” –William Shakespeare
INFO THAT HITS US WHERE WE LIVE… January New Home Sales dipped slightly, but only because the past month’s sales were revised higher. Together, December and January new home sales were the best they’ve been in a year, up 3.5% in that time frame. The median sale price squeaked up $1,000 for the month, to $217,500. Best of all, the supply of new homes dropped to 5.6 months, the lowest in six years,with a record low 151,000 new homes for sale.
Earlier in the week, January Existing Home Sales came in up 4.3%, but only because the past month’s were revised lower. However, this was the third gain in four months and the best level since May 2010. Sales were up in all regions, and the supply of unsold homes dropped to a new post-recession low of 6.1 months. Existing home sales in 2011 were up 1.7% over 2010. The FHFA index of prices for homes with conforming mortgages, was up 0.7% in December and up 1.8% since March, the biggest 9-month gain since 2005-2006.
BUSINESS TIP OF THE WEEK… Business is a network of interconnections. Work the network with ideas and proposals that trigger actions from colleagues, suppliers and clients to help you reach your goals.
>> Review of Last Week
UNLUCKY OVER 13,000… The Dow made several trips over 13,000, but wasn’t lucky enough to ever end a trading day above that number, something it hasn’t done since May 2008. Still, all three major indexes enjoyed gains for the holiday-shortened week, with the S&P 500 racking up its seventh advance in eight weeks. However, investors remain concerned about the slow pace of our economic recovery and the continuing financial uncertainty in Europe.
The housing numbers reported above were good news, as it appears the market is starting to heal. The jobs situation needs to be a whole lot better, but at least it’s not getting worse, with weekly new jobless claims unchanged at 351,000. Continuing unemployment claims dipped to 3.39 million, their lowest since August 2008. And people seem to be feeling more positive, as Friday, the University of Michigan Consumer Sentiment index climbed to its highest level in a year. For the week, the Dow ended up 0.3%, at 12983; the S&P 500 closed UP 0.3%, at 1366; and the Nasdaq shot up 0.4%, to 2964.
Bond prices dipped early in the week, with investors heading back to stocks after a new Greek rescue package was agreed to. But lingering concerns over Europe restored some gains. The FNMA 3.5% bond we watch ended the week up .03, to $103.13.National average mortgage rates edged up slightly for fixed-rate loans, but still remain near the lowest levels on record, according to Freddie Mac’s weekly survey.
DID YOU KNOW?… A recent National Association of Realtors survey reported that 34% of home transactions had cash down payments at or above 20% of the sale price.
>> This Week’s Forecast
PENDING HOME SALES, Q4 GDP, INFLATION…It will be interesting to see today’s January Pending Home Sales number, expected up a bit, given the slide we saw last month. Wednesday’s Q4 GDP – Second Estimate should match the initial number. Inflation comes Thursday, with the Fed’s favorite measure of Core PCE Prices forecast to stay within the central bank’s guidelines.
Manufacturing growth should hold steady as reported by the Chicago PMI for that area and by the ISM Index for the whole country. The Fed’s Beige Book will give us a region-by-region view of the state 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 Feb 27 – Mar 2
|MFeb 27||10:00||Pending Home Sales||Jan||1.0%||-3.5%||Moderate|
|TuFeb 28||08:30||Durable Goods Orders||Jan||-1.4%||3.0%||Moderate|
|TuFeb 28||10:00||Consumer Confidence||Feb||62.5||61.1||Moderate|
|WFeb 29||08:30||GDP – 2nd Estimate||Q4||2.8%||2.8%||Moderate|
|WFeb 29||08:30||GDP Deflator – 2nd Est.||Q4||0.4%||0.4%||Moderate|
|WFeb 29||09:45||Chicago PMI||Feb||60.0||60.2||HIGH|
|WFeb 29||10:30||Crude Inventories||2/25||NA||1.633M||Moderate|
|WFeb 29||14:00||Fed’s Beige Book||Feb||NA||NA||Moderate|
|ThMar 1||08:30||Initial Unemployment Claims||2/25||355K||351K||Moderate|
|ThMar 1||08:30||Continuing Unemployment Claims||2/25||3.425M||3.392M||Moderate|
|ThMar 1||08:30||Personal Income||Jan||0.4%||0.5%||Moderate|
|ThMar 1||08:30||Personal Spending||Jan||0.3%||0.0%||HIGH|
|ThMar 1||08:30||PCE Prices – Core||Jan||0.2%||0.2%||HIGH|
|ThMar 1||10:00||ISM Index||Feb||54.5||54.1||HIGH|
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months… The Fed has made it clear they won’t raise the Funds Rate before the end of 2014 unless they see higher inflation or a stronger recovery. Neither is happening yet. 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|
Probability of change from current policy:
|After FOMC meeting on:||Consensus|