Monday Numbers & Stats

Thanks to Mitch Friedman w/ CityWide Mortgage for the update:

 

For the week of July 29, 2013 – Vol. 11, Issue 30

>> Market Update

QUOTE OF THE WEEK… “If you don’t understand the details of your business, you are going to fail.” –Jeff Bezos, founder and CEO of Amazon.com

INFO THAT HITS US WHERE WE LIVE… It was certainly important to understand the details of last week’s Existing Home Sales report. The headline numbers showed June Existing Home Sales were down a disappointing 1.2%, to a 5.08 million annual rate. But other details were encouraging. Existing Home Sales are up 15.2% over a year ago. The median price of an existing home rose and is now up 13.5% from a year ago. Sales are near their highest levels since November 2009, when they were spiked by the big home buyer tax credit. Existing home sales remain above the 5 million a year threshold, a very decent place to be.

No need to dig into the details of New Home Sales to see success. New single-family home sales shot up 8.3% in June, to a 497,000 annual rate, their highest level since May 2008. These sales are now up a humongous 38.1% versus a year ago. The median price of a new home also gained for the month and is now up 7.4% from a year ago. For those worried about how the recent uptick in mortgage rates would affect sales, this first look at purchase contracts signed in June shows no impact. The FHFA index of prices for homes financed with conforming mortgages was up 0.7% in May, up 7.3% over a year ago.

BUSINESS TIP OF THE WEEK… Learn all you can about the people you want as clients. Check into their social networks and blogs. Then when you get together, you can offer them something meaningful and create immediate rapport.

>> Review of Last Week

TWO UP, ONE SIDEWAYS… The Dow and Nasdaq stock indexes both closed the week marginally ahead, while the S&P 500 essentially went sideways, off less than half a point. These tepid performances reflected the wary mood of investors, as corporate earnings reports were mixed, surprising both to the upside and the down. Wall Street may also have been cautiously looking ahead to this week, packed with market-moving items, including Q2 GDP, another Fed meeting, and the July Employment Report. This isn’t to say investors aren’t still hopeful, as the Dow and S&P 500 are up 19% on the year and the Nasdaq is up 20%!

The economic data reported during the week continued to deliver mixed messages. June Durable Goods Orders beat expectations, but when the volatile transportation sector was excluded, the number missed estimates, coming in flat. New Home Sales were up for June, but Existing Home Sales dipped. Continuing unemployment claims slid below the 3 million threshold, but new weekly jobless claims edged up to 343,000. Happily, on Friday, the University of Michigan Consumer Sentiment Index blew past analyst predictions.

The week ended with the Dow up 0.1%, to 15559; the S&P 500 flat, at 1692; and the Nasdaq up 0.7%, to 3613.

The bears were back in control of the bond market, as the light week of economic data was positive enough to nudge prices down. The FNMA 3.5% bond we watch ended the week down .82, to $100.28. Freddie Mac’s Primary Mortgage Market Survey for the week ending July 25 showed national average fixed mortgage rates easing for the second week in a row. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information. The Mortgage Bankers Association’s Purchase Loan Index was off 2% for the week ending July 19, but up 6% over a year ago.

DID YOU KNOW?… This week’s Employment Report is released by the Commerce Department, one of 15 departments in the executive branch of the federal government. Commerce looks after a wide range of U.S. economic and business activities.

>> This Week’s Forecast

PENDING HOME SALES AND GDP SLIDE, THE FED MEETS, JOBS HOLD… What an action packed week if you’re into economic data (like we are). Pending Home Sales should be down a tad for June, and the Advanced GDP reading for Q2 is forecast to show economic growth even slower than it’s been. We’ll see what the Fed says about that, coming out of their FOMC Rate Decision meeting on Wednesday.

The week ends with the July Employment Report, expected to register 188,000 new Nonfarm Payrolls, as job creation holds to a moderate pace. The Unemployment Rate is predicted to inch down to 7.5%. Inflation should be OK, according to Core PCE Prices, and manufacturing should show growth in the ISM Index and Chicago PMI. Enough data for you?

>> 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 July 29 – Aug 2

 Date Time (ET) Release For Consensus Prior Impact
M
Jul 29
10:00 Pending Home Sales Jun –1.7% 6.7% Moderate
Tu
Jul 30
10:00 Consumer Confidence Jul 81.6 81.4 Moderate
W
Jul 31
08:30 GDP – Advanced Q2 1.1% 1.8% Moderate
W
Jul 31
08:30 GDP Chain Deflator – Advanced Q2 1.2% 1.2% Moderate
W
Jul 31
08:30 Employment Cost Index Q2 0.4% 0.3% HIGH
W
Jul 31
09:45 Chicago PMI Jul 51.5 51.6 HIGH
W
Jul 31
10:30 Crude Inventories 7/27 NA –2.825M Moderate
W
Jul 31
14:00 FOMC Rate Decision 7/31 0%–0.25% 0%–0.25% HIGH
Th
Aug 1
08:30 Initial Unemployment Claims 7/27 345K 343K Moderate
Th
Aug 1
08:30 Continuing Unemployment Claims 7/20 2.995M 2.997M Moderate
Th
Aug 1
10:00 ISM Index Jul 51.5 50.9 HIGH
F
Aug 2
08:30 Average Workweek Jul 34.5 34.5 HIGH
F
Aug 2
08:30 Hourly Earnings Jul 0.2% 0.4% HIGH
F
Aug 2
08:30 Nonfarm Payrolls Jul 175K 195K HIGH
F
Aug 2
08:30 Unemployment Rate Jul 7.5% 7.6% HIGH
F
Aug 2
08:30 Personal Income Jun 0.5% 0.5% Moderate
F
Aug 2
08:30 Personal Spending Jun 0.4% 0.3% HIGH
F
Aug 2
08:30 PCE Prices – Core Jun 0.2% 0.1% HIGH

 

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months…Even if the Fed’s bond purchases start to taper, Chairman Bernanke has stated they won’t raise the super low Funds Rate until unemployment drops to 6.5%, a level not expected 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
Jul 31 0%–0.25%
Sep 18 0%–0.25%
Oct 30 0%–0.25%

Probability of change from current policy:

After FOMC meeting on: Consensus
Jul 31      <1%
Sep 18      <1%
Oct 30      <1%
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