Market News Update - All is Not Rosy

All is not rosy in the economy and investors are not sure where to turn to place their money.  Recent economic data, along with corporate sales information, indicates that the economy may be slowing down again.  More and more we hear the rumor mill on Wall Street talking about how the economy is not quite as strong as people believe.  Some analysts are raising the expectations of falling back into a recession to the highest level of chatter we have heard in over a year.

As far as investors, they just don’t know what to do.  The stock market this week is down almost 300 points as of Friday morning.  Usually, investors in this situation would turn to bonds as the place to stash their money; however, bond prices have been rising as well.  Traditionally, when the stock markets falls, bond yields rise.  However, in this last week we have seen deterioration in both the stock and bond market, making it harder for investors to protect their portfolio values.

Mortgage rates have hit their highest point in over a year and it seems like they are going to keep rising.  The cause of the rate increases is anyone’s guess; however, many investors are still blaming The Fed for it happening.  Ever since the Fed indicated that they will begin to taper their economic stimulus program in the fall of this year interest rates have been creeping up.  We are now in the month of August and the fall is just around the corner which has many bond holders getting more and more nervous.

Next Wednesday the Fed will release their minutes from their last meaning, which may shed some more light on their future economic plans.  There is certainly fear that the minutes may reveal even stronger language that the Fed is closer to ending the stimulus program than many have been wanting to believe.  Wait until Wednesday and we will know more.

Retail sales rose only 0.2 percent in July after the previous month was revised upward to 0.6 percent from 0.4 percent.  The July number fell short of expectations which sent some jitters through the market.  Additionally Wal-Mart and Cisco reported sales below expectations which further dampened the spirits of investors.  As I said in the beginning of this report, investors would have normally jumped into bonds on this type of news, however bond prices are rising simultaneously, making bonds unattractive as well.

Inflation on both the wholesale and retail level continues to remain subdued and does not indicate any upward pressure on prices coming any time soon.  The producer price index came in much softer than expected in most part due to a surprise drop in energy costs.  The index remained unchanged for the month of July after having jumped 0.8 percent in June.  The consumer price index rose a minimal 0.2 percent after jumping 0.5 percent in the prior month.

Market moving reports for next week are:

• Wednesday August 21^st - MBA Applications, Existing Home Sales and FOMC Minutes
• Thursday August 22^nd - First Time Jobless Claims and FHFA Home Price Index
• Friday August 23^rd – New Home Sales

I appreciate your business and look forward to talking to you soon! Have a great day!!!
 
Sincerely,

Cindy Tomlinson
Loan Officer

USLending Company

DRE Lic # 01520422
NMLS # 214851   

PS… FOLLOW ME on Facebook for the latest Mortgage updates

Cyprus Brings U.S. Stock Market Down But Housing Still On Upswing

The stock market this week has continued its recent consistent pattern of hitting new record highs. The pattern has lasted since last week and had been gaining momentum almost daily; however, on Friday it is possible the rising pattern may take a breather.

The stock market futures as of Friday morning are in negative territory primarily based upon news that Cyprus, (yes, that little known country that created market chaos last month) has indicated that they will need more money for the bailout. I personally do not understand why the markets would be concerned over this news for two simple reasons, and I am not being sarcastic.

First, history has taught us that bailouts always require more money than additionally requested. Second, they will get the money because the banking system will not be allowed to fail in Cyprus. These types of events have become normal operating procedure for every country that has faced a financial crisis in the last 3 years.

On Wednesday, the FOMC minutes were released and gave additional support for the stock market rally. Most members of the FOMC feel that the QE3 stimulus program is working and indicated that they are not ready to pull back on it.

Mortgage rates had been declining for about a week, and although they are not back to historic levels, they certainly have stimulated more refinances. The Mortgage Bankers Association reported that refinances for the prior week jumped 6%. Purchase applications unfortunately continue to remain stagnant. Most experts believe that the cause is not so much related to interest rates, but more so impacted by so many markets around the country having a shortage of inventory for sale.

The good news relating to the housing market is that in the last week the main stream media has significantly increased their reports on the improving housing market. Like with everything else the media impacts, the media can create movement in the housing market because the more they report on positive events and data, the more consumers will respond to take advantage of the rising home prices.

For those of you in the mortgage profession, real estate profession, or homeowner thinking of selling, it is my opinion that you should get ready for the market to start heating up. We have many positive things happening simultaneously. Housing reports are showing significant improvement in property values, the media is helping fuel housing demand, and we are entering the Spring selling season. All of these factors together stand to push housing to higher levels, as it is more and more likely that sellers that have been waiting will now start to place their homes for sale on the market.

The economic calendar for next week will provide some potential market movers :

• Tuesday April 15^th - Consumer Price Index, Housing Starts and Industrial Production
• Wednesday April 16^th - MBA Applications
• Thursday April 18^th - First Time Jobless Claims and GDP

I appreciate your business and look forward to talking to you soon! Have a great day!!!
 
Sincerely,

Cindy Tomlinson
Loan Officer

USLending Company

DRE Lic # 01520422
NMLS # 214851   

PS… FOLLOW ME on Facebook for the latest Mortgage updates

Market News Update - Housing Stable, Stocks Decline

The irony of the markets is that we have a complete turn of events.  While the housing market continues to improve the stock market continues to head south.

Mortgage rates have once again hit record lows and the numbers are showing up all over how the housing market is responding.  Last week the Mortgage Bankers Association reported a jump in purchase mortgage applications of 11% and refinance applications of 13%.  These are by far the largest increases we have seen in a single week all year.

The Fed keeps pumping money into the bond market to keep interest rates low, however the uncertainty about the “fiscal cliff” has the stock market tanking because investors are purchasing government bonds in record numbers.  (I will talk more about the "fiscal cliff” in a moment)

Next week there will be a lot more housing data to digest, which will give a better picture of the real improvements taking place.  The reports on existing homes sales, housing starts and the housing market index will all be released on Monday and Tuesday.  Given that next week is a holiday week, it is expected that a lot of investors will be taking the week off, so trading volume on this news will be light.

Ugh, now to talk about the rest of the economy.  The fiscal cliff is making headlines daily and more and more talk is focused that there is an ever increasing chance that the government will NOT act fast enough to avert the massive spending cuts that will be triggered on January 2^nd.

A few months ago most people were saying, “There is no way Congress will let it happen. The election will be over and they will get this thing handled.”  Well…the election IS over and Congress is behaving no different than they were before the election.  Time is running out and employers and consumers are becoming more and more concerned.

Employers are not hiring right now and first time jobless claims jumped last week by 78,000.  This jump blasts through the all important 400,000 mark and puts us at 439,000 claims for the week.  Although Hurricane Sandy is playing a role in the jump, the huge increase cannot be ignored and the reality is that the Hurricane represents only part of the increase.  Employers are very concerned about the fiscal cliff and have made it clear that they are not going to increase payrolls without knowing if we are going to be thrust back into recession because our elected officials cannot come to an agreement.

The stock market has been getting hammered in the last 30 days with the DOW dropping over 1000 points.  This drop is almost entirely due to investor concern about the fiscal cliff becoming a reality.

Next week’s economic reports are:

• Monday November 19^th – Existing Home Sales and Housing Market Index
• Tuesday November 20^th – Housing Starts
• Wednesday November 21^st - MBA Applications and Jobless Claims
• Thursday November 22^nd – Markets Closed for Thanksgiving Holiday
• Friday November 23^rd – Markets close early at 1:00PM

I appreciate your business and look forward to talking to you soon! Have a great day!!!
 

Sincerely,

Cindy Tomlinson
Loan Officer

USLending Company

DRE Lic # 01520422
NMLS # 214851   

PS… FOLLOW ME on Facebook for the latest Mortgage updates

Market News Update - Elections Over as Fiscal Cliff Looms

Thankfully the election is over. I don’t know if I could have taken another day of the constant barrage of negativity and attacks being waged everywhere from TV, radio to print. In the end, after the most expensive election in history, we basically have a government that has not changed at all. President Obama has another 4 years, the House of Representatives remains controlled by Republicans, and the Senate is still controlled by Democrats.  Bottom line, government is unchanged and it cost 6 billion dollars. (Yes, that is “B” for “billion”)

As discussed in last week’s newsletter, there was very little domestic news to trade on this week as everyone has been waiting on the election results. The election is done and the markets went crazy on Wednesday with investors pulling their money out of the stock market, causing the DOW to experience its largest one day decline of the year of 313 points. On Thursday the markets continued to tumble with another drop of 121 points.

Individuals in tune with the markets believed that the drop was due to the fact that President Obama had been re-elected for another 4 years. As much as investors and Wall Street were not thrilled with the election results, the sell-off in the markets was due to the fact that the landscape of government has not changed. The fear that is taking over the markets is that if both sides of government don’t start working together quickly, the economy will very likely continue in its recession at the start of 2013.

You may or may not know what it is, but the headlines all over the business wires are about this thing called the “Fiscal Cliff”. In 2011 the Budget Control Act of 2011 was passed. This law was created to permit the government to extend the debt ceiling which allowed the government to continue to borrow money to keep operating. The law was passed and, simply put, stated that if the government is allowed to continue to borrow money, then Congress must agree to adopting certain spending controls and policies by the end of 2012.  In the event that Congress does not put these controls in place, then spending cuts and tax increases will be triggered on January 2^nd 2013.

Well... here we are almost at the end of 2012 and Congress is no closer to coming to an agreement on taxes and spending which means we are getting dangerously close to the Fiscal Cliff becoming reality.  Investors are scared and are starting to pull their money out of the stock market now.  If Congress does not get their act together then the spending cuts will be triggered and you can bet your last dollar that we will see the stock market tank like it did back in 2007.

Personally I believe that Congress WILL come to an agreement; however, it may not happen until after the cuts begin to take place and pressure is put on them to take immediate action.

Next week’s economic reports are:

• Monday November 12^th – Veterans Day (Stock Market Open, Banks and Bond Market Closed
• Wednesday November 14^th - MBA Applications, Producer Price Index, Retail Sales, FOMC
• Thursday November 15^th - First Time Jobless Claims, Consumer Price Index
• Friday November 16^th – Industrial Production          

I appreciate your business and look forward to talking to you soon! Have a great day!!!
 

Sincerely,

Cindy Tomlinson
Loan Officer

USLending Company

DRE Lic # 01520422
NMLS # 214851   

 

PS… FOLLOW ME on Facebook for the latest Mortgage updates