http-equiv="Content-Type"> For
the week of February 20, 2012 – Vol. 10, Issue 8
>>
Market Update QUOTE OF THE WEEK..."Strive
for continuous improvement, instead of perfection." --Kim Collins,
track and field star
INFO THAT HITS US WHERE WE LIVE... U.S. homebuilding is
certainly following the advice of the first World Champion sprinter
from Saint Kitts and Nevis. With housing starts registering a
699,000 annual rate in January, we're still a good way from perfection,
but continuous improvement is being demonstrated. Also improved were
December's starts, upwardly revised to 689,000. Best of all, the
three-month moving average improved to a 697,000 annual rate, a
three-year
high. And single-family
starts
are up 16.2% versus a year ago.
New building permits were also up in January 0.7%, to a 676,000
annual rate. Versus a year ago, they're up 55% for multi-family
and up 6.2% for single family homes. Even better, the number of single-family homes under
construction was up 2.1% in January, the largest gain since 2004.
And there were 119,000 more
single-family starts than
completions in January, the widest gap in those numbers since
the housing boom peak in 2006. Builders clearly are more
optimistic.
BUSINESS TIP OF THE WEEK...
It's important to stay optimistic. Every problem has a solution and
you'll usually find it more
quickly by having a positive
attitude from the start. >>
Review of Last Week UP...
The stock market went in the right direction, enjoying its sixth
advance in seven weeks with the S&P 500 at a
new nine-month high. It wasn't clear why investors felt so good,
as
economic signals continued mixed. The Greek
parliament approved austerity measures, but the situation is not yet
resolved and there are other spendthrift Eurozone countries waiting in
the wings. Good news over here
included the above Housing Starts, plus weekly initial jobless
claims dropping to 348,000. Although declining, this
number is still not where it needs to be.
Then there's inflation. Core CPI put consumer prices up a
greater than expected .02% for January and up 2.3% year-over-year,
their biggest gain since 2008. Leading Economic Indicators (LEI)
were up a fourth straight month, but lower than expected. Manufacturing
showed surprising strength in the Philadelphia and New York regions,
yet overall industrial production came in flat. Retail sales were up in January following a
flat December, but car sales were stalled.
For
the week, the
Dow ended up 1.2%, at 12950; the S&P 500 closed UP 1.4%,
at 1361; and the Nasdaq shot
up 1.6%, to 2952.
There were small pull backs in bond prices as investors pulled out,
hoping the Greek debt crisis would get resolved this weekend. The
FNMA 3.5% bond we watch ended the week down only .06, to $103.10. The
national
average
rate on a 30-year fixed rate mortgage stayed at its record low level in Freddie
Mac's weekly survey. Average
rates overall remain historically low.
DID YOU KNOW?...The top reasons people are selling
their
homes is for job relocation, tied with a need for more space, according
to the
latest seller profile from the National Association of Realtors. >>
This Week’s Forecast HOME
SALES, JOBS, CONSUMER MINDSET...
It's a quiet week for economic reports but two big ones
will depict the state of the housing market in January. Wednesday's Existing Home Sales
are expected up just a bit, and Friday's New Home Sales
are also forecast to rise, though still far below where they should
be. We'll monitor weekly Initial Jobless
Claims and Continuing Claims on Thursday, and Friday brings the
final read on University of Michigan
Consumer Sentiment for February.
The markets will be closed
Monday in observance of Presidents' Day.
>> 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 20 – Feb 24
Date Time
(ET) Release For Consensus Prior Impact W
Feb 22 | 10:00 | Existing Home Sales | Jan | 4.63M | 4.61M | Moderate | Th
Feb 23 | 08:30 | Initial Unemployment Claims | 2/18 | 355K | 348K | Moderate | Th
Feb 23 | 08:30 | Continuing Unemployment Claims | 2/11 | 3.450M | 3.426M | Moderate | Th
Feb 23 | 11:00 | Crude Inventories | 2/18 | NA | -0.171M | Moderate | F
Feb 24 | 09:55 | Univ. of Michigan Consumer Sentiment-Final | Feb | 73.0 | 72.5 | Moderate | F
Feb 17 | 08:30 | New Home Sales | Jan | 315K | 307K | Moderate |
>> Federal
Reserve Watch Forecasting Federal Reserve
policy changes in coming months... Last week's FOMC Minutes from
the January 25 meeting revealed only one Fed member thought inflation
would necessitate a rise in the Funds Rate before the end of
2014. 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 Mar 13 0%–0.25% | Apr 25 | 0%–0.25% | | Jun 20 | 0%–0.25% |
Probability of change from current policy:
After
FOMC meeting on: Consensus Mar 13
<1% Apr 25
<1% | Jun 20 |
<1% | |
