http-equiv="Content-Type"> For
the week of May 21, 2012 – Vol. 10, Issue 21
>>
Market Update QUOTE OF THE WEEK..."Do
what you can, with what you have, where you are."
--Theodore Roosevelt, 26th U.S. President
INFO THAT HITS US WHERE WE LIVE... Home builders are doing
plenty with what they have, as Housing Starts rose
2.6% in April to a 717,000 annual rate. Single-family units
were up 2.3% for the month and are up 18.8% from a year ago.
Multi-family starts were up 3.2% for the month and are up a whopping
63.0% from a year ago. This reflects interest in the condo market,
attractive to first time buyers and downsizers, as well as investor
interest in rental units. Building Permits were down 7.0% in April to a
715,000 annual rate, although permits for
single-unit homes are up 18.5% versus a year ago.
Experts say housing starts have
to hit a 1.5 million annual rate just to meet the need created by
population growth and "scrappage" of older units. That probably won't
happen until 2016, so the home building
recovery is still very young. But the National Association of
Home Builders reported builders' sentiment rose in May to its
highest level in five years. At
29, it still has a long way to go before
it's in positive territory above 50, last seen in April 2006.
BUSINESS TIP OF THE WEEK...
A French proverb says, "People count up the faults of those who keep
them waiting." So when a colleague needs your input or a client needs
an answer, hustle! >>
Review of Last Week BEARING
DOWN... Wall Street's bears remained in control as the
Dow and S&P 500 headed lower for the third week in a row, the
S&P 500 posting its worst weekly performance since November. Investors
worried about Greece leaving the euro zone. The country's
politicians couldn't form a coalition government, so a fresh vote needs
to be taken. Over here, the continuing saga of JP Morgan's big trading
loss kept investors on edge, along with a big
drop in the Philly Fed
index that showed a manufacturing slowdown
in that region.
Continuing the disappointments, April Retail Sales were up only half what
was forecast and the Leading Economic Indicators (LEI) index surprised
to the downside. But on the positive side, the CPI inflation reading came in without
any shocks. Also, Industrial
Production surged a better than expected 1.1% in April and the Empire
State Manufacturing Index handily beat expectations for May, which dispelled factory sector concerns. Friday saw the frenzy around the IPO of
social website Facebook, whose shares closed up a mere 0.6%.
For
the week, the
Dow ended down 3.5%, at 12369; the S&P 500 closed down 4.3%,
to 1295; and the Nasdaq sank
5.3%, to 2779.
As investors worried about Greece and swallowed hard on some
disappointing economic data, they flocked to the safe haven of bonds.
Mortgage-backed securities did well, with the
FNMA 3.5% bond we watch finishing the week UP .15, to $104.16. Rising
bond prices drove national average mortgage rates down
deeper into record territory in Freddie
Mac's weekly survey. But demand for purchase loans dipped, with
applications down to levels of a year ago.
DID YOU KNOW?... The census reported the median size of a
new home in 2010 was 2,169 square feet, down from the 2007 peak of
2,277 square feet. >>
This Week’s Forecast APRIL HOME
SALES, EXISTING AND NEW...
The big economic news this week covers the
full read on April home sales, starting with Existing Home Sales on
Tuesday, expected UP to a 4.65 million annual rate. Wednesday
we'll see New
Home Sales for the month, also forecast up, but just by a small
amount, to 340,000 units.
We will continue to monitor Initial Jobless Claims, looking for any improvements in the
employment picture, so vital to the housing market's recovery.
Unfortunately, no major changes for the better are predicted. Durable Goods Orders should inch into positive territory from
the prior month's big drop, a good sign.
>> 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 May 21 – May 25
Date Time
(ET) Release For Consensus Prior Impact Tu
May 22 | 10:00 | Existing Home Sales | Apr | 4.65M | 4.48M | Moderate | W
May 23 | 10:00 | New Home Sales | Apr | 340K | 328K | Moderate | W
May 23 | 10:30 | Crude Inventories | 05/19 | NA | 2.128M | Moderate | Th
May 24 | 08:30 | Initial Unemployment Claims | 05/19 | 365K | 370K | Moderate | Th
May 24 | 08:30 | Continuing Unemployment Claims | 05/12 | 3.250M | 3.265M | Moderate | Th
May 24 | 08:30 | Durable Goods Orders | Apr | 0.3% | -3.9% | Moderate | F
May 25 | 09:55 | Univ. of Michigan Consumer Sentiment | May | 77.5 | 77.8 | Moderate |
>> Federal
Reserve Watch Forecasting Federal Reserve
policy changes in coming months... Virtually all economists
believe the Fed will keep rates super low well into next year. 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 20 0%–0.25% | Jul 31 | 0%–0.25% | | Sep 12 | 0%–0.25% |
Probability of change from current policy:
After
FOMC meeting on: Consensus Jun 20
<1% Jul 31
<1% | Sep 12 |
<1% | |
